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Powell Stresses Fed Will be "Nimble"

FED
  • Inflation remains "well above our longer-run goal of 2%". Supply and demand imbalances related to the pandemic and reopening "have continued to contribute to elevated levels of inflation, in particular, bottlenecks and supply constraints are limiting how quickly production can respond to higher demand in the near term. " These problems have been larger/longer lasting than anticipated.
  • While the drivers of inflation have been predominantly in areas dislocated by the pandemic, "have now spread to a broader range" of goods and svcs. Wages have risen "briskly" and "we are attentive to risks of wage growth in excess of productivity putting pressure on inflation".
  • Discusses current mon pol stance (why unch rates today, affirmed ending QE in early March). "Of course the econ outlook remains highly uncertain" and "we'll need to be nimble". "we will remain attentive to risks including the risk that high inflation is more persistent than expected and are prepared to respond as appropriate to achieve our goals."
  • Powell mentions the set of principles on balance sheet runoff released today, going through the bullet points in the document.
  • "The committee has not made decisions regarding the specific timing, pace, or other details of shrinking the balance sheet and we will discuss these matters in upcoming meetings and provide additional information at the appropriate time."
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