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tv   Federal Reserve Chair Gives Remarks at Jackson Hole Symposium  CSPAN  August 27, 2022 6:40pm-6:53pm EDT

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risks and there is a $5,000 grand prize. videos must be submitted by january 20, 2023. visit our website at for rules, resources, and a step-by-step guide. >> when congress returns from its recess in september, the january 6 committee plans to resume its hearings. house and senate lawmakers will vote on government ending, the deadline to prevent a government shutdown is september 30. watch live coverage of the house in september on c-span, the senate on c-span2. also our free video app c-span now. jerome powell says the fed will continue to raise interest rates and hold them at a higher level until inflation is in control. the comments came at the jackson hole symposium in wyoming. this is about 10 minutes. >> thank y.
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thank you for the opportunity to speak here today. at past jackson hole conferences, i have discussed broad topics, such as the ever-changing structure of the economy and the challenges of conducting monetary policy under uncertainty. today, my remarks will be shorter. my focus narrower, and my message more direct. the federal open market committee's overarching focus right now is to bring inflation back down to our 2% goal. stability is the responsibility of the federal reserve and serves as the bedrock of our economy. without price stability, the economy does not work or anyone, in particular, without price stability, we will not achieve sustained period of labor market conditions that benefit all.
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the burden falls heaviest on those least very to hold the burden. restored price stability requires using our tools forcefully to bring demand and supply into better balance. reducing inflation is likely to require sustained periods of below trend growth. moreover, there will likely be softening of labor market conditions while higher interest rates, slower growth and a softer conditions will bring down inflation, they will also bring some pain to households and businesses. these are the unfortunate costs of reducing inflation. the u.s. economy is clearly slowing from the historically high growth rates of 2021, which reflected the reopening of the economy following the pandemic recession.
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while the economic data has been mixed, in my view the economy continues to show strong underlying momentum. the labor market is particularly strong, but it is clearly out of balance with demand for workers substantially exceeding the supply of available workers. inflation is running well above 2% and high inflation has continued to spread. while the lower inflation readings for july are certainly welcome, a single month's improvement falls far short of what the committee will need to see before we are confident that inflation is moving down. so we are moving our stance purposely to a level that will be restrictive to return inflation to 2%. at our most recent meeting in july, we raised the target range to 2.25% to 2.5%, in the range
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of estimates of where the rate is projected to settle in the longer run. in circumstances with inflation above 2% in the market extremely tight, estimates of longer run neutral are not a place to stop. july's increase in the target range was the second 75 basis point test raise and i said another could be appropriate at the next meeting. we are halfway through the meeting period and conclusions will depend on the evolving outlook. at some point, as the stance tightens further, it likely will become appropriate to slow the pace of increases. restoring price stability will likely require maintaining a restrictive policy stance for some time. the historical record cautions strongly against prematurely loosening policy. the committee participants
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individual projections from the june sap shows the federal funds rate slightly below 4% through the end of 2023. participants will update projections at the september meeting. our monetary policy decisions build on what we have learned about inflation dynamics from a high and volatile inflation of the 1970's and 1980's and the stable inflation of the last quarter-century.
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in particular, we are drawing on three important lessons that i will highlight. the first lesson is that central banks can and should take responsibility for delivering low and stable inflation. it may seem strange central bankers once needed convincing on these two fronts. as former chairman bernanke he has shown, both positions were questioned during the great inflation period. today, we regard to these questions as settled. our responsibility to the liver price stability is unconditional. it is true that the current high inflation is a global phenomenon and that many economies around the world faced inflation as high or higher than in the united states. there is clearly a job to do to better align demand with supply. the second lesson is that the public's expectation about future inflation can play an important role in setting the path of inflation over time. by many measures, longer-term inflation expectations appear to remain well anchored. that is broadly true of surveys in households, businesses and forecasters and of market based measures.
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that is not grounds for complacency with inflation having run well above our goal for some time. if the public expects inflation will remain low and stable over time, then absent major shocks, it likely will. unfortunately, the same is true of expectations of high and volatile inflation. during the 1970's, as inflation climbed, the anticipation of high inflation came entrenched in the economic decisions. -- decision-making of businesses and households. the more inflation rose, the more people expected it to be high, and they built that belief into wage and price decisions. as former chairman walker put it at the height of the great inflation in 1979, inflation feeds, in part, on itself. so, part of the job of returning to a more productive economy must be to break the grip of inflationary expectations. one useful insight into how actual inflation may affect
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expectations about its future path is based on the concept of rational inattention. when inflation is persistently high, households must pay close attention and incorporate inflation into their economic decisions. when inflation is low and stable, they are freer to focus their attention elsewhere. former chairman alan greenspan put it this way. for all practice will purposes price stability means expected , changes in the average price level are gradual enough that they do not materially enter business and household financial decisions. of course, inflation has just about everyone's attention right now, which highlights a particular risk today. the longer the current bout of high inflation continues, the greater the chance of higher inflation expectations will become entrenched. that brings me to the third lesson, which is that we must keep at it until the job is done. history shows the employment costs of bringing down inflation are likely to increase with
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delay as high inflation becomes more entrenched in wage and price settings. the successful voelker disinflation of the early 1980's followed multiple failed attempts to lower inflation over the previous 15 years. a lengthy period of very restrictive monetary policy was ultimately needed to stem high inflation and start the process of getting inflation down to the low and stable levels that were the norm until the spring of last year. our aim is to avoid that outcome by acting with resolve now. so, these lessons are guiding us as we use our tools to bring inflation down. we are taking forceful and rapid steps to moderate demand so it comes into better alignment with supply and keep inflation expectations anchored. we will keep at it until we are confident the job is done. thank you. [applause]
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