From 'Too Hot' To 'Time Has Come': 10 Moments Powell Shed Light On Inflation

In recent years, Federal Reserve Chair Jerome Powell mentioned inflation extensively in various speeches, testimonies, and reports.

This Wednesday will be no different. The Fed will meet and put in place what the market expects to be a 25-point basis reduction to its benchmark interest rate.

The rate influences borrowing costs for mortgages, credit cards, and car loans. It’s been kept at a two-decade high for more than a year to discourage spending and subdue inflation.

With inflation having fallen close to pre-pandemic levels, the Fed is at a turning point.

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Powell typically makes comments at major public appearances, such as his semiannual report to Congress and the Jackson Hole symposium. He also holds regular press conferences following Federal Open Market Committee (FOMC) meetings.

In terms of frequency, he has addressed inflation-related topics in nearly every major policy address over the past year, including regular updates to the Senate and House committees, speeches to international forums, and press briefings.

Below is a list of Powell pull quotes Benzinga gathered in reverse chronological order to summarize the journey thus far. Recall how inflation peaked in mid-2022 at 9.1%. That was the highest rate in four decades. Last month, we were at 2.5%:

August 2024

• "The time has come for policy to adjust… The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks." This was part of his address at last month’s Jackson Hole Economic Symposium, signaling that the Fed believes inflation is finally moving closer to its long-term target after years of elevated levels​.

• “Inflation brought substantial hardship, especially for those least able to meet the higher costs of essentials like food, housing, and transportation.” Powell acknowledged the widespread economic and social difficulties caused by high inflation, highlighting the Fed's efforts to alleviate the pressures​.

• “While the task is not complete, we have made a good deal of progress toward restoring price stability while maintaining a strong labor market.” Here, Powell emphasizes that the Fed’s focus on controlling inflation has been effective, without causing a dramatic rise in unemployment​.

June 2024

• “The labor market has come into better balance, with continued strong job gains and a low unemployment rate. Inflation has eased substantially from a peak of 7% to 2.7% but is still too high.”

August 2023

• "We are navigating by the stars under cloudy skies." Here, Powell emphasized how the Fed is adjusting its policies based on incomplete data
  
• “We remain strongly committed to bringing inflation back down to our 2% goal, but we have seen progress. At the same time, we have to be mindful of how higher rates impact the economy.” In this quote, Powell balances the Fed's dual mandate of controlling inflation and maintaining employment.

June 2023

• “I won't say [food and energy prices are] not affected at all by monetary policy, but they're principally affected by other things in the economy.” Here, Powell was referring to the war in Ukraine and supply chain disruptions.

March 2023

• “Wages are moving in the right direction, but inflation is still running too hot to declare victory." Here, Powell underscores the connection between wage growth and inflation, hinting that while progress has been made, the Fed’s job is not yet complete.

November 2022

• “History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

March 2022

• “Inflation is likely to take longer to return to our price-stability goal than previously expected. The median inflation projection of FOMC participants is 4.3% this year and falls to 2.7% next year and 2.3% in 2024; this trajectory is notably higher than projected in December, and participants continue to see risks as weighted to the upside.”

Big Picture: Ever since Powell hinted at an upcoming rate cut, markets have witnessed a bull run, with the S&P 500 and the Dow now near record highs.

Therefore, investors are largely optimistic about the economy, which polls indicate is a key issue leading into the 2024 election. This tracks with the messaging coming from Vice President Kamala Harris‘s 2024 campaign. However, it differs from the arguments made by ex-President Donald Trump.

Now Read:

• Investors Bet On 50-Basis-Point Rate Cut, Wall Street Analysts Urge Caution: ‘This Is A Low-Conviction Fed’

Image created using artificial intelligence via Midjourney.