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Fed Chair Powell: Slower economic growth may be needed to conquer stubbornly high inflation
Federal Reserve Chair Jerome Powell says inflation remains too high and that bringing it down to the Fed’s target level will likely require a slower-growing economy and job market
United States Federal Reserve Chair Jerome H. Powell has said that inflation remains too high and the path toward sustainable reduction is uncertain despite a recent notable improvement in the inflation trajectory.
In a highly anticipated address at the Economic Club of New York Luncheon, Powell noted that after reaching a peak of 7.1 percent in June 2022, the 12-month headline Personal Consumption Expenditure (PCE) inflation has fallen to an estimated 3.5 percent through September. Core PCE inflation, which excludes volatile food and energy components, is also on a downward trajectory, estimated at 3.7 percent through September.
Labor Market Dynamics
Regarding the labor market, Powell said strong job creation coupled with an increase in the supply of workers due to higher participation and immigration rebounding to pre-COVID pandemic levels. Various indicators suggest that the labor market is gradually cooling, with job openings and quits returning to pre-pandemic levels. Surveys of workers and employers also indicate a return to pre-pandemic levels of tightness. Powell noted that wage growth is showing a gradual decline, aligning with the goal of 2 percent inflation over time.