Press conference exchange between ANDREW ACKERMAN and Fed Chair Jerome Powell:

user: Thanks, Mr. Chairman. Andrew Ackerman with the Washington Post. In your Jackson Hole comments last year, you said you would not welcome further cooling in labor market conditions. The unemployment rate then was 4.2 percent, which is what it is now. Forecasters—many forecasters now predict a higher jobless rate. How has your tolerance for weakening labor market conditions changed compared to a year ago?

assistant: So it was quite a different situation. What was happening last year is that over the space of six, eight, seven months, the unemployment rate went up by almost a full percentage point, and it was click, click, click, click, click each month. And, you know, everywhere, people were talking about downside risks to the labor market. At the same time, payroll job numbers were getting softer and softer. So there was a really obvious concern about downside risk to the labor market. And so at Jackson Hole and then in September, you know, we wanted to address that forthrightly. We wanted to show that we were there for the—I mean, we had been there for inflation for a couple of years, and we wanted to show also that we’re there for the labor market. And it was important that we send that signal. Fortunately, since then, the labor market has really—and the unemployment rate have really been moving sideways at a level that is, you know, well in the range of mainstream estimates of maximum employment. So that concern has gotten a lot less. So, you know, you’re at 4.2 percent unemployment. I think we were in a very different situation. And now we have a situation where, you know, the risks to higher inflation and higher unemployment have both gone up, as we noted in our statement, and we’ve got to monitor both of those. We actually have a potential situation where there may be a tradeoff or tension between the two potentially. We don’t have it yet, and we may not have it, but that’s what we may have, and that’s why I think it’s a very different, different situation.

user: I, I mean, I guess I want to follow up by asking how much of a rise in the jobless rate you would—you could tolerate.

assistant: I can’t give you a—you know, a—I’m not going to try to give you a specific number. I’ll just say, we’ve got—we have to now be looking at both variables and which of them is, is, you know, demanding—if one of them is demanding our focus more than the other, that would tell us what to do with policy. If they’re more or less this, you know, equally distant and equally—or not distant, then we don’t have to make that assessment. You know, the assessment is, you wait. So I’m not going to try to be really specific about what we need to see in terms of the number. But if—look, if we did see, you know, significant deterioration in the labor market, of course that’s one of our two variables, and we would look to be able to support that. You’d hope that it wasn’t also coming at a time when inflation was getting very bad. And, again, we’re speculating here. We don’t know this. We don’t know any of these things. It’s very hypothetical. We’re just going to have to wait and see how the—how it plays out.