Fed Chair Powell: labor market is ‘not excessively tight’

Federal Reserve Chairman Jerome Powell delivered a speech on Friday at the Economic Club of Chicago. He repeated most of what he said after the last FOMC meeting. 

He backed a patient approach when it comes to raising rates by mentioning that gradual rate hikes were best to promote growth. 

“Since monetary policy affects the economy with a lag, waiting until inflation and employment hit our goals before reducing policy support could have led to a rise in inflation to unwelcome levels. In such circumstances, monetary policy might need to tighten abruptly, which could disrupt the economy or even trigger a recession”, said Powell. 

Regarding the economic outlook, Fed Chair considered that said risks are roughly balanced while on inflation, mentioned that the annual rate should move up significantly over the next months. 

“Of course, our views about appropriate monetary policy in the months and years ahead will be informed by incoming economic data and the evolving outlook. If the outlook changes, so too will monetary policy. Our overarching objective will remain the same: fostering a strong economy for all Americans--one that provides plentiful jobs and low and stable inflation”, he concluded his speech.