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President Powell Says It May Be Appropriate To Start Reducing Bond Buying This Year

In his remarks prepared for delivery at the Jackson Hole Economic Symposium titled “Macroeconomic Policy in an Uneven Economy,” FOMC Chairman Jerome Powell has said that he thought at the July policy meeting that it would be appropriate to start reducing the asset purchase this year.

Additional comments

“My view is that the case of ‘additional substantial progress’ for inflation has been met.”

“There has been clear progress towards maximum employment.”

“Since July, there has been more progress in terms of employment, but also in the expansion of the Delta variant.”

“You will carefully evaluate incoming data and evolving risks.”

“The timing and pace of the tilt will not be intended to carry a direct signal as to when to adjust interest rates.”

“We have a lot of ground to cover to reach maximum employment.”

“Time will tell if we have achieved 2% inflation on a sustainable basis.”

“Despite current challenges, the US economy is on its way to the job market as it was before the pandemic.”

“The baseline prospects are to continue moving towards maximum employment and inflation returns to 2%.”

“Working conditions are improving but they are turbulent.”

“The outlook for the job market has brightened considerably in recent months.”

“Favorable conditions for job seekers should help the economy cover the ‘considerable remaining ground’ to reach maximum employment.”

“The prospects are good to continue moving towards maximum employment.”

“Even after asset purchases end, our high long-term equity holdings will continue to support accommodative financial conditions.”

“The changes we made last year to declare on long-term objectives and monetary policy strategy are adequate to address current challenges.”

“The incoming data should provide more evidence that supply-demand imbalances are improving, more evidence of continued moderation in inflation.”

“We also expect to see continued strong job creation.”

“If sustained higher inflation became a serious concern, the Fed would certainly respond and use tools to ensure inflation is consistent with our target.”

“Responding to temporary fluctuations in inflation can do more harm than good.”

“Given that substantial slack remains in the job market and the pandemic continues, such a mistake could be particularly damaging.”

“Inflation at these levels is cause for concern.”

“Elevated Inflation Readings Probably Temporary.”

“Durable price increases are a major factor driving inflation above the 2% target.”

“It seems unlikely that durable inflation will continue to make a significant contribution to headline inflation over time.”

“I would be concerned about signs that inflationary pressures are spreading more widely.”

“There is little evidence of wage increases that could threaten excessive inflation.”

“Long-term inflation expectations are broadly consistent with the 2% target.”

“Little reason to think that underlying disinflationary factors have suddenly reversed, they will probably continue to weigh on inflation.”

“For now, monetary policy is well positioned.”

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