Jerome Powell comments

Powell Says Fed Will ‘Proceed Carefully’ on Any Further Rate Rises

Fed chair notes economy hasn’t cooled as expected and says signs of more strength could warrant additional action

By Nick Timiraos, The Wall Street Journal, Updated Aug. 25, 2023

JACKSON HOLE, Wyo.—Federal Reserve Chair Jerome Powell cautioned that past interest-rate increases had yet to fully slow the economy, an argument for holding rates steady for now, even though stronger and sustained growth could require higher rates to keep inflation declining. [end quote]

Here is Mr. Powell’s speech.


August 25, 2023

Inflation: Progress and the Path Ahead

Chair Jerome H. Powell

It is the Fed’s job to bring inflation down to our 2 percent goal, and we will do so. We have tightened policy significantly over the past year. Although inflation has moved down from its peak—a welcome development—it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective…

On a 12-month basis, core PCE inflation peaked at 5.4 percent in February 2022 and declined gradually to 4.3 percent in July 2023 (figure 1, panel B). The lower monthly readings for core inflation in June and July were welcome, but two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We can’t yet know the extent to which these lower readings will continue or where underlying inflation will settle over coming quarters. Twelve-month core inflation is still elevated, and there is substantial further ground to cover to get back to price stability…

But we are attentive to signs that the economy may not be cooling as expected. So far this year, GDP (gross domestic product) growth has come in above expectations and above its longer-run trend, and recent readings on consumer spending have been especially robust. In addition, after decelerating sharply over the past 18 months, the housing sector is showing signs of picking back up. Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy…

Two percent is and will remain our inflation target. We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to that level over time. It is challenging, of course, to know in real time when such a stance has been achieved. There are some challenges that are common to all tightening cycles. For example, real interest rates are now positive and well above mainstream estimates of the neutral policy rate. We see the current stance of policy as restrictive, putting downward pressure on economic activity, hiring, and inflation. But we cannot identify with certainty the neutral rate of interest, and thus there is always uncertainty about the precise level of monetary policy restraint…

As is often the case, we are navigating by the stars under cloudy skies. … [end quote]

This is a firm answer to anyone who thinks the Fed has done enough and should start loosening policy. The market has repeated been premature in its expectations. Mr. Powell has been clear about his determination from the beginning of the Fed’s rate raising cycle in 2022.

The options market now predicts that the fed funds rate will be constant or perhaps higher until 1Q24. The market doesn’t split evenly on higher or lower rates until May 2024.



To be clear, I don’t know of anyone saying “they should start loosening”. I think they should just stand pat. They’re acting like a hyperactive child demanding the inflation reach their mythical 2% figure quickly. That’s not how it works, at least not if you don’t want to overshoot and run the economy into the ground.


That is more your worry about your asset prices than reality based thinking.

This will be a shallow recession. Labor will be mostly alright. Your asset prices are over priced. You have known that since December 2021. The FED does not owe you. The FED may pander to you by not getting into discussing asset prices but they do not owe you. And wont listen to you.

Powell knows what he is doing and must do it. He will bring down asset prices. Yep starting at ground zero. Look possibly at April next year as a target date for when things turn up. Sometime in there you all can breath easier. You wont like the trip unless you have some cash.

My favorite data wonk says that Jerome Powell is just screwing with us.



Sentence one, which you bolded, has been obvious and clear for a long time. I find sentences two and three more interesting: the definition of a “stance” that is “sufficiently restrictive” and knowing if they have achieved it. No explicit metric to watch for is given.


and currently, this shows that every single measure of inflation is between 1% and 2%. How much good news does Powell need?

What he can’t say, for political reasons, is the objective is to beat down worker pay. Can’t let the proles have any bargaining power. Look at the UAW! They want to regain everything that was taken away from them in 2009, and they want a raise to equal what the CEOs have gained. Can’t have that!



Using the ‘rule of 72’ that means that the real value of the US dollar will halve in approximately36 years.

Nothing like undermining the value of a currency :slight_smile:

The dollar has lost something like 90% of it’s buying power over the last 50 years. With tongue firmly in cheek, I have suggested Shiny-land adopt a banana republic approach, and issue new currency at a 1 for 10 rate, each piece of currency to feature a portrait of Arthur Laffer, or other appropriate leading light of “voodoo economics”.



And the standard of living over all improved. You need to square that to understand why almost all of us are totally against the gold standard.

You have not squared that yet which leaves most of us saying not that nonsense again about gold.

1 Like

You have not squared that yet which leaves me saying not that nonsense again about gold.

There fixed that for you. I can speak for myself.


1 Like

I wasn’t thinking of gold. This was one of the main aims of The Federal Reserve when it was formed in 1913:

The Federal Reserve Act of 1913 established the Federal Reserve System as the central bank of the United States to provide the nation with a safer, more flexible, and more stable monetary and financial system.

Assuming Powell’s manages to hit his target (big assume) then how does a policy of deliberately devaluing the US dollar meet the purpose of The Federal Reserve?

From one dollar in 1913 to 4 cents now:

The graph below shows the purchasing power of the US dollar since 1913. 1913 is when the Federal Reserve, which is actually a privately-owned central bank, took over the US banking system.

As you can see, it’s been pretty much downhill since the Fed took over. In fact, the dollar has lost over 96% of its value.

That means today’s dollar would be worth less than 4 cents back in 1913. How much longer will the dollar maintain its reserve-currency status at this rate?

I’m surprised people just accept such a financial kicking from the banking system

1 Like

Could be that my standard of living now is substantially better from when I entered the work force in 1989? Heck, even over just the last decade I’m doing much better.


The standard of living from 1913 to today is much better than the standard of living from 1913 to the dawn of time. Some people dream about the good old days not realizing that we are already living in them right now. Which period would you really like to live in?



The goal you quoted was a stable SYSTEM, not a stable CURRENCY. If a small but steady devaluing of the currency results in a stable financial system then the goal has been met.


What’s a stable system?

How do you have a stable system without a stable currency?

I read this nearly 50 years ago but is still timely.


You seem to not be aware that inflation predates the creation of the Fed. You post as if you think a horse in 1800 cost the exact same amount as it did in 1900.

The rate of inflation throughout the 1800s averaged 2.44%. How was that possible without a Fed?!?


Between 1800 and 1804 the price index averaged 46.8 and between 1900 and 1904 the average was only 26; not only was there no long-term inflation, there was deflation. Just ask William Jennings Bryan. There was not enough gold (currency) for the growing economy.



I’m quite aware of this but that’s not the point.

The Federal Reserve (J P Morgan?) was formed to bring price stability:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.

So what is the point of The Federal Reserve?

There most definitely were times of inflation during the 1800s. There of course was times of massive deflation as well (even worse)

The point remains, we had massive swings in inflation (and deflation) that predate the creation of the Fed. The Fed was in part created to reduce those massive swings.