Fed's Powell Says Labor Market Has Softened Considerably

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Transcript

00:00There really isn't a risk-free path now since it appears that inflation is running above our target

00:08and appears to be continuing to increase, quite gradually, but increase. It's still on the way up.

00:14So there's a risk there that would lend to greater persistence.

00:18But now the labor market has demonstrated pretty significant downside risks as payroll jobs have declined.

00:26Both the supply and demand for labor has declined quite sharply.

00:32So those two states of affairs for our two variables, our two goal variables, call for different monetary policy responses.

00:41So as they come more into balance, I think the idea has been that policy should move from being tight to some degree

00:49to being more neutral as those two things balance out.

00:52But it is clear, though, that if we move too quickly, then we may leave the inflation job unfinished

00:59and have to come back later and finish it.

01:01If we move too slowly, there may be unnecessary losses, painful losses in the employment market.

01:06So we're in the difficult situation of balancing those two things.

01:09I think for the last few months, we've been able to maintain a restrictive stance because the labor market was still pretty solid.

01:17I think the data we got right after the July meeting showed that, which adjusted back all the way through May,

01:24showed that the labor market has actually softened pretty considerably

01:27and puts us in a situation where the two risks are closer to being in balance.

01:31Thank you, sir.