“Over time, inflation has become much less responsive to changes in resource utilization,” Powell said.
The Fed chairman discussed risk-management strategy at a time when the economy’s structure is changing and uncertain.
“The FOMC has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides,” he said. “The need for the sort of risk-management approach that originated in the new-economy era is clearer than ever before.”
Fed officials see near-term risks coming from White House policies, minutes from their July 31-Aug. 1 meeting show. An escalating trade war could put a dent in hiring and investment, while fiscal stimulus could accelerate growth further at a time when the economy is already running hot.
“The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one,” Powell said. “My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.”
This article provided by Bloomberg News.