00:00Coming into the summer, I was asking myself whether policy was restrictive enough to deliver 2% inflation or whether
00:07a somewhat higher federal funds rate might be needed.
00:10Was underlying inflation improving?
00:12Were pressures from tariffs, energy, and AI staying contained?
00:17And were growth in the labor market consistent with some modest monetary policy restrictiveness?
00:23By September, it was clear that inflation risks were growing.
00:28Underlying inflation showed little to no progress.
00:31Tariff-related price pressures eased, but price pressures from the conflict in the Middle East and the AI build-out
00:37grew.
00:38Meanwhile, economic growth firmed up a little, and the labor market strengthened a touch.
00:43Against this backdrop, the risk of persistently elevated inflation had increased.
00:49And that's why I supported raising the federal funds rate by 25 basis points at last week's meeting.
00:54This recalibration brings policy closer to what I believe is needed to return inflation to 2% at a pace
01:02that appropriately balances inflation risks with risks to the labor market.
01:06Looking ahead, if conditions evolve as I expect, some modest further tightening may be warranted.
01:13As always, I'll be watching the data and listening closely to what businesses and workers are telling me.
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