Comments from Powell in the media Q&A:
- It's much more likely we would see inflation expectations move up with a tight labor market
- It would take some time for expectations to move up and it would likely take a strong labor market to do that
- Says it's 'pretty unlikely' that inflation expectations would move up with slack in the labor market
- We were very worried about scarring in the labor market and small businesses being wiped out last year. So far, we haven't experienced that level of scarring in either
- We do monitor the housing market very carefully
- We are likely to see some upward pressures on prices during reopening but those are likely to be temporary
- An episode of one-time price increases is not the same thing as persistent year-over-year rises
- If prices were to materially rise against expectations, we would use our tools
- Base effects are a reason that 12 months readings will be high. You'll see that in PCE inflation later this week
- Base effects will add about 1 percentage point to y/y inflation and 0.7 pp to core
- The other one-time factor is bottlenecks
- If we see inflation moving above 2% persistently in a material way, then we will use our tools. No one should doubt that in that event, we would be prepared to use our tools
- If there were really labor market tightness, we'd see faster wage growth.
There was a modest US dollar retracement as Powell emphasized that the Fed wouldn't hesitate to hike if inflation got away from them but the dollar remains near the lows of the day.
