Powell Says FOMC Determined to Avoid Entrenched Inflation

- Q: In SEP, unemployment runs below long-run rate, inflation above, and that's in a regime where for at least 2 years the funds rate is above the longer-run rate. Are you not giving a forecast that suggests you will continue to run further behind the curve?

• A: The medians are not something we voted on, it's not a plan. By the end of this year, broadly participants are at/close to/above their estimates of neutral. So that should be a removal of accommodation basically. AT the same time we will have done significant balance sheet runoff.
• Re unemployment remaining at 3.5%, one factor is the connection between inflation and the unemployment rate - this is an expectation that wage increases, which are now running above the level that would be consistent over the long run with 2% inflation will move back down to levels which are full employment kind of wages but not to a point where they're pushing up inflation anymore.
• There are lot of factors causing inflation to come down. And, you know, the reality is there are many, many moving pieces and we don't know what will actually happen. No matter what happens, this is a committee that is determined to use its tools to make sure that higher inflation does not become entrenched.