Fed Chairman Jerome Powell speaks on economy and inflation

• December 1, 2022
• realestatelife
• Announcements, Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate Finance, Recession, World News, Your Real Estate Life

Federal Reserve Chair says the path ahead for inflation remains “highly uncertain.”

Powell said inflation forecasts of private-sector forecasters or of Federal Open Market Committee participants broadly show a significant decline over the next year. However, forecasts have been predicting just such a decline for more than a year, while inflation has moved stubbornly sideways.

Powell said the central bank anticipates ongoing increases will be appropriate.

“It seems to me likely that the ultimate level of rates will need to be somewhat higher than thought at the time of the September meeting and Summary of Economic Projections,” Powell said. “We have more ground to cover.”

Powell spoke on the outlook for the economy, inflation, and the changing labor market at the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution.

Following his prepared remarks, Powell will be interviewed by Hutchins Center director David Wessel and will take questions from the audience.

Powell on Jobs

Powell said, “Wage increases will be an important part of the story going forward.”

The Fed chair said there’s an incentive for moderating employment demand. “Right now people’s wages are being eaten up by inflation,” Powell said, while noting wages at the lower end are rising faster than inflation.

He said the labor market will not come into balance until there is price stability, pointing out the latest jobs data shows there are 1.7 job openings for every unemployed worker.

He said the labor market could come into balance through declining job openings.

Powell added that wages have to go up with a level consistent with 2% inflation.