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Powell Says Economy Has Made Considerable Progress Towards Dual Mandate

FED
  • The economy has made considerable progress towards the dual mandate objective. That is good news. But inflation is still high.
    • The risks to inflation and employment goals are moving into better balance.
    • Recent indicators show activity has been expanding at a solid pace. Housing sector activity was subdued over the past year, high rates also appear to have affected business fixed investment.
    • Labor market: relatively tight but supply and demand coming into better balance, though demand still exceeds supply.
    • Inflation has eased notably over the past year but remains above our longer-run 2% target. Core PCE rose 2.8% Y/Y to February. Longer-run expectations remain well anchored.
  • As the labor market tightness has eased and inflation has come down, the risks of achieving employment and inflation goals are coming into better balance. We believe rates are likely at peak and if economy evolves broadly as expected, it will likely be appropriate to begin dialling back restraint at some point this year. The outlook is uncertain , and we are highly attentive to inflation risks. We're prepared to maintain rates for longer if appropriate. Reducing restraint too soon or too much could result in a reversal in the progress we've seen in inflation, and require tighter policy to get inflation back to 2%. Reducing restraint too late could unduly impact employment.
    • The committee does not expect it will be appropriate to reduce the target range until it has gained confidence that inflation is moving sustainably down towards 2%. Of course we're committed to both sides of our dual mandate and an unexpected weakening in the labor market could warrant a policy response.
    • Decisions made meeting-by-meeting.
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