Press conference exchange between VICTORIA GUIDA and Fed Chair Jerome Powell:

user: Hi, Chair Powell. I wanted to ask, you were talking about the health of the labor market. And I’m curious whether you would characterize where we’re at right now as maximum employment. And also, along those same lines, obviously rate hikes are on the table this year, do you think that the Fed can raise rates, bring inflation under control without hurting jobs and wages?

assistant: Sorry. Just getting both, both parts of your question written down. So I would say—and this view is widely held on the Committee—that both sides of the mandate are calling for us to move steadily away from the very highly accommodative policies we put in place during the challenging economic conditions that the economy faced earlier in the pandemic. And I would say that most FOMC participants agree that labor market conditions are consistent with maximum employment in the sense of the highest level of employment that is consistent with price stability. And that is—that is my personal view. And, and, again, very broad support on the Committee for the judgment that it will soon be appropriate to raise the target range for the federal funds rate. The other thing is, maximum employment will, will evolve over time and through the course of the business cycle. In the particular situation we’re in now, it may well increase. Max—the level of maximum—of employment that’s consistent with stable prices may increase. And we hope that it will, as more people come back into the labor market, as participation gradually rises. And the policy path that we’re broadly contemplating would be supportive of that comment—that outcome as well. So the thing about the labor market right now is that there are—there are many millions of, of more job openings than there are unemployed people. So you ask whether we can— whether we can raise rates and, and move to less accommodative, and even tight, financial conditions without hurting the labor market. I think there’s quite a bit of room to raise interest rates without threatening the labor market. This is, by so many measures, a historically tight labor market. Record levels of job openings, of quits. Wages are moving up at the highest pace they have in decades. If you look at surveys of workers, they find jobs plentiful. Look at surveys of companies—they find workers scarce. And all of those readings are at levels, really, that we haven’t seen in a long time—and, in some cases, ever. So this is a very, very strong labor market, and my strong sense is that we can—we can—we can move rates up without, without having to, you know, severely undermine it. I also would point out that there are—there are other forces at work this year, which should also help bring down inflation, we hope, including improvement on the supply side, which will ultimately come. The timing and pace of that are uncertain. And also, fiscal policy is going to be less supportive of, of growth this year—not of the level of economic activity, but the fiscal impulse to growth will be significantly lower. So there are multiple forces—which should be working over the course of the year for inflation to come down. We do realize that the timing and pace of that are, are highly uncertain and that inflation has persisted longer than we—than we thought. And, of course, we’re prepared to use our tools to assure that higher inflation does not become entrenched.