Fed Chairman Jerome Powell reiterated on Monday his expectations that at the next Fed meeting, the central bank will begin the process of reducing the balance sheet, a process that will last three years. Monetary amounts are not a big part of the inflation story right now, Powell noted, saying having a strong job market is important and a big focus. Today’s job market is much tighter and hotter than it was before the pandemic, Powell added.
Additional remarks:
“In principle, a less accommodative monetary policy could reduce demand and stabilize prices.”
“Ultimately, if you want a strong job market, you have to have price stability.”
“What we are seeing in Ukraine looks more like a classic supply shock.”
“But I want to be very careful to get monetary policy where it needs to be and I don’t feel comfortable looking through the shock.”
“I don’t have proof of what would trigger a 50bp rise.”
“It is possible that we will come to the conclusion that we need to move faster.”
“If we come to that conclusion, we will.”
“Monetary policy does not need to do 100% of the work against inflation.”
“We are going to look at real progress in supply chains before reacting.”
Source: Fx Street
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