Powell Says Liftoff Dependent on Framework Adopted in September

Q: Does the committee have a different opinion than you do about the stringent test threshold for liftoff you have articulated?

- A: Substantial further progress toward our goals is the test for beginning the taper. The taper takes some months, in everyone's figuring.

• You are going to be well away from satisfying the liftoff test when we begin the taper. So in terms of the liftoff test, it's what we adopted last September: it's labor market conditions consistent with maximum employment. In many ways the labor market is very tight, but also have lots of slack.
• We think those imbalances will sort themselves out. Inflation at 2% and on track to achieve moderately higher inflation over 2%. That depends on the path of inflation. If remains higher during 2022, we may have already met that test by the time we reach lift off.
• If you look at what people are writing down for 2022 (in the SEP), some are writing down very low unemployment rates. That is only one indicator, but it suggests a very strong labor market. I think they are writing down, in good faith, what they see is meeting the test. There is a range of perspectives about where the economy will be. All but one participant has us lifting off during 2023. So it's not really an unusually wide array of views about this.