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Powell Sees Labor Market Unhealthily Tight

FED

- Q: How do higher Fed rates reduce consumer demand unless through higher unemployment?

  • A: You have 1.7 job openings for every unemployed person - that's a very, very tight labor market, tight to an unhealthy level I would say. If our tools worked as described and rebalance demand and supply, and you were moving down the number of job openings, you would have less upward pressure on wages. These are fairly understood channels.
  • Without price stability, you can't have a sustained period of max employment. We have to restore price stability.

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