Federal Reserve press conference, 2024-01-31 — Chair Jerome Powell

Question (Richard Miller, Bloomberg): Thank you—sorry. Thanks for taking the question, Mr. Chairman. You mentioned earlier we’re not seeking a weaker labor market, I think you, you said. Can you talk a little bit more about that? Do you—do you think the labor market now is back to quote, unquote, “normal” and that the—we can achieve the inflation target without wage gains coming back down to what they were pre-pandemic? Even with today’s ECI levels, they were still above those pre-pandemic levels.
Answer: I, I think the labor market by many measures is at or nearing normal—but not totally back to normal. And you pointed to one or more of them. So I think, you know, job openings are not quite back to where they were. Wages—wage increases, rather, are not quite back to where they—to where they would need to be in the longer run. I, I would look at it this way, though. The, the economy is broadly normalizing, and so is the labor market. And that process will probably take some time. So wage setting is something that happens—it’s, it’s—you know, probably will take a couple of years to get all the way back. And that’s okay. That’s okay. But we do see—you saw today’s ECI reading—you know, the evidence is that, that wage increases are still at a healthy level—very healthy level—but they’re gradually moving back to levels that would be more associated—given, given assumptions about productivity, are more typically associated with 2 percent inflation. It’s, it’s an ongoing process—a healthy one— and, and, you know, I think we’re, we’re moving in the right direction.