Powell On What Prompted Pivot Toward Greater Wariness On Inflation

Q: What prompted your pivot toward greater wariness of inflation?

• A: Powell goes through the timeline of data, calls it a "continual process". Said inflation popped up in Spring, and view "widely widely held" that it would be temporary or "transitory". Then in Sept after Labor Day " it started to become clear that this was both larger in its effect on inflation and more persistent. " They moved the taper forward; says they got the ECI reading on the eve of the November meeting, then got a "very strong" employment report afterwards, and then the CPI "a very high reading" and "
• I honestly at that point really decided we needed to look at speeding up the taper, and we went to work on that so that's really what happened."- Says the view was widely supported by the Committee.
• Again notes "wages are not a big part of the high inflation story that we're seeing." But points to real wages > productivity growth, and rent prices, as things they need to keep their eye on.