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Fed's Powell says some ways away from substantial progress on jobs

July 28, 2021 2:30 PM EDT

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(Updated - July 28, 2021 3:25 PM EDT)

(Updated - July 28, 2021 3:22 PM EDT)

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(Updated - July 28, 2021 2:39 PM EDT)

  • Fed's Powell Begins Press Conference
  • Fed's Measures Ensure Policy to Support Economy
  • Most Impacted Sectors from Virus Not Fully Recovered
  • Housing Very Strong
  • FOMC reviewed some considerations around asset-purchase program
  • Q&A Begins
  • Ground to cover on labor market
  • We're some ways away from substantial progress on jobs
  • "I'd say we have some ground to cover on the labor-market side. I think we're some way away from having had substantial further progress toward the maximum employment goal. I would want to see some strong job numbers, and that's kind of the idea."
  • On delta variant, Powell says monitoring carefully, may weigh on return to labor market
  • Ways away from considering raising interest rates, not on radar
  • important feature of recovery is how uneven it is
  • Powell concerned new strains of virus will keep coming
  • Most inflation related to reopening economy, temporary
  • In near term, risks to inflation probably to upside
  • Inflation in medium term likely to move back down
  • Low yields could be related to delta variant, technical factors, no single explanation
  • Doesn't see anything that's questioning the Fed's framework when it comes to drop in yields
  • Framework test will be when we think about raising rates
  • Clearly on path to very strong labor market, shouldn't take that long to get there
  • Ideally Fed wouldn't be buying assets and raising rates
  • Labor market impacted by people finding new jobs, virus concerns, and generous unemployment benefits, caretakers
  • Factors weighing on employment should wane
  • With delta will have to watch, seems like effects will probably be less
  • Doesn't seem like delta effects will be very large
  • Transitory means process of inflation will stop, not taking prices back
  • On timing of taper, Powell says there is range of views, no decisions made
  • Won't predict what he will say in Jackson Hole remarks
  • Inflation impacted by handful of things, mentions cars, hotels
  • Waiting to see if prices "flatten out"
  • Doesn't think it will take that long to know
  • Members raised issue around MBS and tapering
  • generally speaking, little support for tapering MBS earlier than treasuries
  • some attraction for faster pace of MBS tapering
  • Inflation driven by supply side
  • best estimate that this is something that will pass
  • on alert, will react in need too
  • base case is inflation will go back down
  • Not seeing wage inflation leading to price inflation
  • Doesn't 't see 1970's style inflation upward spiral

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