Fed’s Powell Tested Positive for Covid-19 Yesterday

I would like to thank the Pennsylvania Bankers Association for the invitation to join you today.1 I appreciate the opportunity to engage with you on matters that affect the banking industry. Before sharing my thoughts about the current bank regulatory environment, I will discuss my views on the economy and monetary policy. Update on the Economy and Monetary Policy Outlook Over the past two years, the Federal Open Market Committee (FOMC) has significantly tightened the stance of monetary policy to address high inflation. At our meeting earlier this month, the FOMC voted to continue to hold the federal funds rate target range at 5-1/4 to 5-1/2 percent and to continue to reduce the Federal Reserve's securities holdings, but at a slower pace beginning in June. After seeing considerable progress on slowing inflation last year, we have not yet seen further progress this year. The 12-month measures of total and core personal consumption expenditures (PCE) inflation have moved roughly sideways since December and remained elevated at 2.7 percent and 2.8 percent, respectively, in March. With average core consumer price index (CPI) inflation this year through April running at an annualized rate of 4.3 percent, well above average inflation in the second half of last year, I expect inflation to remain elevated for some time. The recent pickup seems to be evident across many goods and services categories, suggesting that inflation was temporarily lower in the latter half of last year. Prices continue to be much higher than before the pandemic, which is weighing on consumer sentiment. Inflation has hit lower-income households hardest since food, energy, and housing services price increases far outpaced overall inflation throughout this episode. Economic activity increased at a strong pace last year but post: Bowman: We Have Not Yet Seen Further Progress on Inflation This Year Fed’s Bowman: Monitoring Data to Assess if Policy is Sufficiently Restrictive Bowman: Repeats Baseline Outlook That Inflation Will Decline Further with Policy Rate Steady, but Sees Risks post: Fed’s Bowman: Willing To Raise Rates If Inflation Stalls Or Reverses - Inflation To Remain Elevated For ‘Some Time’ - Policy Is Restrictive, Monitoring To See If It Is Sufficient