Powell Says Fed Sticks to Framework When Mandates Conflict

Q: (from MNI's Jean Yung): How would the Fed balance the two sides of its mandate - if inflation stays elevated but we still have a labor shortage and participation remains lower than ideal, would you hold off on rate liftoff?

- A: You are looking for conditions consistent with maximum employment to lift off - those conditions can change over time. You are not necessarily bound by the level of unemp rate / participation rate which can change over time.

• We have a paragraph in our framework. You're talking about a situation in which the two goals are not complementary. What it says is we take into account the employment shortfalls and inflation deviations in a potentially different time horizon.
• We used to call it the balanced approach paragraph. We are sort of in that situation in a short-term way, but we think we do expect that this is sort of because of the Covid shock and reopening, so temporary.