The Chairman of the Federal Reserve delivered a speech on the state of the economy and monetary policy. He acknowledged the struggle that high inflation is causing and emphasized the Fed's commitment to bringing inflation back down to the target of 2%.
He discussed the current economic situation, noting that the data from January showed a reversal from the softening trends seen in the previous month, with inflationary pressures running higher than expected. The Chairman also mentioned that the U.S. economy slowed significantly last year, with real GDP rising at a below-trend pace of 0.9%. Despite this, the labor market remains extremely tight, with the unemployment rate at its lowest level since 1969.
In regard to monetary policy, the Chairman noted that the Fed has been tightening its stance over the past year, raising interest rates by 4.5 percentage points, and that they will continue to increase the target range for the federal funds rate to attain a stance of monetary policy that returns inflation to 2%. However, the pace of interest rate increases has slowed over the past two meetings as the Fed takes into account the incoming data and its implications for the outlook for economic activity and inflation. The Chairman also mentioned that restoring price stability will likely require a restrictive stance of monetary policy for some time and that the Fed will stay the course until the job is done.
The Chairman concluded his speech by emphasizing the Fed's public mission to achieve maximum employment and price stability and how their actions affect communities, families, and businesses across the country.
