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Powell on Balancing Risks Between Dual Mandate

FED
  • Q: How much are Americans harmed by inflation at its current level, vs putting weight back on the employment side of your dual mandate?
  • A: It's good that headline inflation has come down so much because that's what the public experiences. Having it move down will strengthen the broad sense to the public that inflation is coming down, which will in turn, we hope, help inflation continue to move down.
  • It's really a question of how you balance the two risks: of doing too much or too little. We're coming to a place where there really are risks on both sides, hard to say whether they're in balance or not.
  • Core inflation is still quite elevated, so we think we need to stay on task, certainly hold policy at restrictive levels for some time, and be prepared to raise further if we think that's appropriate.
  • It's not that we're aiming to raise unemployment, but we have to be honest about the historical record which is that when central banks slow the economy to bring down inflation, the result tends to be some softening in the labor market. The worst outcome would be not to deal with inflation now.
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