Powell Says Won't Hesitate to Make Policy Restrictive If Needed

Q: Do you agree with colleagues who say rates will need to move above neutral? Would the FOMC have the courage to endure a recession to bring inflation down (like Volcker did)?

• A: It's certainly possible we will need to move policy to levels we see as restrictive as opposed to just neutral. That decision is not in front of that today. If we conclude we need to, we won't hesitate to do it. There's no bright line you are stepping over.
• Re Paul Volcker: I am an admirer, who isn't. He had the courage to do what he felt was the right thing. That's the test, it isn't will we do one particular thing. We do see restoring price stability as absolutely essential for the country in coming years, with out it the economy doesn't work for anybody. It's really essential for the labor market. We've been hit by historically large inflationary shocks since the pandemic.
• We have to look through that and look at the economy coming out the other side, and somehow find price stability out of this and it's going to be challenging.