Powell Says Raising Rates Before End of Taper Wouldn't Be Ideal

Q: Would you be prepared to raise rates even if we're not at maximum employment if inflation is a danger? Could you hike even if you are still buying assets?

• A: Most of the time, if you have high inflation, you also have high employment. This is a situation where they're temporarily going in different directions. We feel like we're going to be making good progress over the course of the next couple of years toward maximum employment. This is a very strong labor market. If you look at the number of job openings compared to the number of unemployed, we're clearly on a path to a very strong labor market with high participation, low unemployment, high employment, wages moving up.
• It shouldn't take that long in macro economic time to get there. That's what I think is really the likely case. Again, it's not timely for us to be thinking about raising rates right now. What we're doing is looking at our assets purchases and judging what is right for the economy and judging how close we are to substantial further progress and then tapering after that.
• RE hiking before taper is over: That's a hypothetical question. We'd face the circumstance at the time. It's hard to answer what you would do without knowing a lot more about the situation. Ideally, you wouldn't be still buying assets and raising rates because of course you're adding accommodation by buying and removing accommodation by raising rates. That wouldn't be ideal, I'll say that.