Jerome H. Powell, Chair, Board of Governors of the Federal Reserve, said that time has come for the monetary policy to adjust.
“Inflation has declined significantly. The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic,” he said at symposium on “Reassessing the Effectiveness and Transmission of Monetary Policy,” sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyo. on Friday. “Supply constraints have normalized. And the balance of the risks to our two mandates has changed. “Our objective has been to restore price stability while maintaining a strong labor market, avoiding the sharp increases in unemployment that characterized earlier disinflationary episodes when inflation expectations were less well anchored. “While the task is not complete, we have made a good deal of progress toward that outcome,” Powell pointed out.
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of
rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.
“We will do everything we can to support a strong labor market as we make further progress toward price stability. “With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to two percent inflation while maintaining a strong labor market. “The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions,” he went on.
“Our restrictive monetary policy helped restore balance between aggregate supply and demand, easing inflationary pressures and ensuring that inflation expectations remained well anchored.
“Inflation is now much closer to our objective, with prices having risen 2.5 percent over the past 12 months.
“After a pause earlier this year, progress toward our 2 percent objective has resumed. My confidence has grown that inflation is on a sustainable path
back to two percent,” he added.
Source: Kuwait News Agency