Press conference exchange between MICHAEL MCKEE and Fed Chair Jerome Powell:

user: Thank you, Mr. Chairman. I’d like to weave some of the strands of your answers together and ask you, as you start to reverse policy, what your goal is. Are you going to be raising interest rates until you get inflation to 2 percent? Do you want to go below 2 percent so that, on average, you get a 2 percent inflation rate? And because you said we have to protect the employment part of your mandate, is there some circuit breaker that would stop you from raising interest rates on the employment side?

assistant: So, no. There’s no—there’s nothing in our framework about having inflation run below 2 percent so that we would do that, try to achieve that outcome. So the answer to that is, is “no.” What we’re trying to do is get inflation, keep inflation expectations well anchored at 2 percent. That’s, that’s always the, the ultimate goal. And we do that in the service of having inflation—we get to that goal by having inflation average 2 percent over time. And if inflation doesn’t average 2 percent over time, then it’s not clear why inflation expectations would be anchored at 2 percent. So that, that’s the way we think about that. You know, it—what was the last part of your—of your question?

user: I was asking if you’re protecting the employment side of the mandate, whether there’s some circuit breaker there.

assistant: Nothing like that. I mean, I would say you have a tremendously strong labor market. And you have growth this year at—forecast to be well above—well above potential. I mean, people who are forecasting growth think potential growth is around 2 percent. Most forecasts of actual growth are significantly above that for 2022, and that’s even with, with policy becoming substantially less accommodative. So the labor market’s going to be strong for some time. We’re—ideally, what we’re trying to achieve is inflation getting back down to 2 percent. And we’re trying to do that in a process that, that, that accomplishes—you know, that will also leave the labor market in a very strong position. And no one really knows what that will take. Again, I would say that it isn’t just monetary policy that’s helping inflation get down. It’ll be supply-side improvements, and it’ll be less, less fiscal, you know, less fiscal impulse in all likelihood. So—but monetary policy will do our job. It is our job to get inflation down to 2 percent. And a situation where, where the two goals are—the two goals can be in tension is a difficult one. But I—but I don’t really think they are here, though, because I think a really significant threat to further strengthening in the labor market in the form of higher participation over time is high inflation. And also, high inflation is taking away the benefits of some of these larger wage increases that we’re seeing now. So we do hope to achieve, and our plan is to achieve, both of those goals.

user: If I could—if I could follow up, does the danger of tightening too much as policy works its way into the economy with a lag mean that you should go back to being more forecast dependent in making decisions, rather than the state dependency you’ve been using as a framework for the last year and a half or so?

assistant: State dependency was particularly around the thought that if we—if we saw a very strong labor market, we would wait to see actual inflation—actual inflation before we tightened. And so that was a very state-dependent thought because, for a long time, we’d been tightening on the expectation of high inflation, which never appeared. And that was the case for, for a number of years. So in this particular situation, we will be clearly monitoring incoming data as well as the evolving outlook.