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Question From MNI's Jean Yung On How Fast Inflation Has Fallen

FED
  • Q: MNI's Jean Yung: It's been surprising how fast inflation has come down this year, is there something different about the US economy?
    • A: We felt since the beginning it would be a combination of two factors - the first was pandemic unwinding, and the second was our policy.
    • It may or may not be about the US economy being different. This inflation was not the classic demand overload, it was a combination of very strong demand and unusual supply side restrictions. A vertical supply curve. W broadly had the view you could come straight down that vertical supply curve as demand fell, and something like that has happened so far - the question is once that part runs out (and we think it has a ways to run).
    • Labor force participation might have further to run, immigration could help, but at some point you run out of supply-side help and then it just gets down to demand and it gets harder. But to say with certainty that the last mile's going to be different, I'd be reluctant to suggest that we have any certainty around that. We just don't know. Inflation keeps coming down, the labor market keeps getting back into balance. So far, so good, although we kind of assume that it will get harder from here, so far, it hasn't.
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