#PowellRemarks

Federal Reserve Chair Jerome Powell recently delivered remarks on the economic outlook, highlighting progress in reducing inflation and adjusting monetary policy. Here's a breakdown of his key points¹:

- *Inflation Reduction*: Powell noted that inflation has declined significantly since peaking at 7.1% in June 2022, now standing at 2.5% over the past 12 months. He expressed confidence that inflation is on a sustainable path back to the Fed's 2% target.

- *Labor Market Cooling*: The labor market has cooled down from its previously overheated state, with the unemployment rate rising to 4.3% from 3.4% in early 2023. However, job gains remain solid, and layoffs haven't increased significantly.

- *Monetary Policy Adjustment*: Powell indicated that the time has come for policy to adjust, with the direction of travel clear. The timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.

- *Economic Growth*: Despite inflation and labor market challenges, the economy continues to grow at a solid pace. Powell emphasized the Fed's commitment to supporting a strong labor market while making further progress toward price stability.

- *Lessons from the Pandemic*: Powell discussed the pandemic's impact on the economy, attributing the rise in inflation to an "extraordinary collision between overheated and temporarily distorted demand and constrained supply." He highlighted the importance of anchored inflation expectations in facilitating disinflation without economic slack.

Overall, Powell's remarks suggest a shift in the Fed's approach, prioritizing both inflation control and labor market support. The Fed aims to maintain a strong economy while navigating the challenges of inflation and monetary policy.