Summary of Federal Reserve Chair Powell speaks at Chicago Booth's monetary policy forum — 3/7/2025
Summary of Jerome Powell's Remarks
Federal Reserve Chair Jerome Powell delivered remarks at the Chicago Booth's monetary policy forum, discussing the current state of the U.S. economy, inflation, and the Fed's monetary policy framework. He emphasized that despite elevated uncertainty, the economy remains in a solid position with a strong labor market and inflation approaching the Fed's long-term target of 2%.
Key Points from His Speech
- Economic Growth: The U.S. GDP grew at a 2.3% annual rate in the fourth quarter of the previous year, supported by resilient consumer spending, although there are signs of moderation in spending moving forward.
- Labor Market: The labor market is characterized as solid, with 151,000 jobs added in February and an unemployment rate of 4.1%. Wage growth is outpacing inflation, contributing to a balanced labor market that is not driving inflationary pressures.
- inflation Trends: inflation has decreased from its mid-2022 peak of over 7% to around 2.5% for total PCE prices. However, Powell noted that inflation readings remain slightly above the 2% target, and the path to achieving this sustainably has been inconsistent.
- Policy Outlook: Powell stated that the Fed is prepared to maintain policy restraint longer if inflation does not move sustainably towards the target. He highlighted the importance of monitoring various economic indicators, including those related to household and business spending.
- monetary policy Framework Review: The Fed is conducting a review of its monetary policy framework, focusing on potential changes to its consensus statement and communication strategies. The review will consider lessons learned over the past five years, although the 2% inflation goal will remain unchanged.
- External Factors: Powell discussed the implications of new administration policies on trade, immigration, fiscal policy, and regulation, indicating that the net effect of these changes will be crucial for economic and monetary policy trajectories.
- Uncertainty and Gradualism: He acknowledged the high levels of uncertainty in the current economic environment, advocating for a cautious and gradual approach to policy adjustments.
- Lessons from Recent Events: Reflecting on the pandemic's impact on inflation, Powell noted that global factors and stronger-than-expected demand played significant roles in the inflationary pressures observed.
- Future of Economic Data: He emphasized the importance of reliable economic data, noting that the Fed is exploring new data sources to improve real-time economic tracking.
In conclusion, Powell expressed confidence in the Fed's current policy stance and its ability to navigate economic uncertainties while remaining focused on achieving its dual mandate of maximum employment and price stability.
Presenters/Contributors
- Jerome Powell (Federal Reserve Chair)
- Anil Kashyap (Director of the CL Center)
Notable Quotes
— 19:20 — « The tails are fatter than you think; however fat you think the tails are, they're fatter than you think. »
— 24:18 — « He set the gold standard for that; that is the thing most of the time for 40 years we haven't had to do that. »
Category
News and Commentary