for release on delivery 10 : 05 a. m. edt ( 8 : 05 a. m. mdt ) august 25, 2023 inflation : progress and the path ahead remarks by jerome h. powell chair board of governors of the federal reserve system at “ structural shifts in the global economy, ” an economic policy symposium sponsored by the federal reserve bank of kansas city jackson hole, wyoming august 25, 2023 good morning. at last year ’ s jackson hole symposium, i delivered a brief, direct message. my remarks this year will be a bit longer, but the message is the same : it is the fed ’ s job to bring inflation down to our 2 percent goal, and we will do so. we have tightened policy significantly over the past year. although inflation has moved down from its peak — a welcome development — it remains too high. we are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective. today i will review our progress so far and discuss the outlook and the uncertainties we face as we pursue our dual mandate goals. i will conclude with a summary of what this means for policy. given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks. the decline in inflation so far the ongoing episode of high inflation initially emerged from a collision between very strong demand and pandemic - constrained supply. by the time the federal open market committee raised the policy rate in march 2022, it was clear that bringing down inflation would depend on both the unwinding of the unprecedented pandemic - related demand and supply distortions and on our tightening of monetary policy, which would slow the growth of aggregate demand, allowing supply time to catch up. while these two forces are now working together to bring down inflation, the process still has a long way to go, even with the more favorable recent readings. on a 12 - month basis, u. s. total, or “ headline, ” pce ( personal consumption expenditures ) inflation peaked at 7 percent in june 2022 and declined to 3. 3 percent as of - 2july, following a trajectory roughly in line with global trends ( figure 1, panel a ). 1 the effects of russia ’ s war against ukraine have been a primary driver of the changes in headline inflation around the world since early 2022. headline inflation

of services, such as health care, food services, transportation, and accommodations. twelve - month inflation in this sector has moved sideways since liftoff. inflation measured over the past three and six months has declined, however, which is encouraging. part of the reason for the modest decline of nonhousing services inflation so far is that many of these services were less affected by the normalization of dislocations due to the pandemic is likely playing a role here as well. for example, the shifts in housing preferences related to working from home likely contributed to the increase in housing demand reflected in the sizable earlier increases in rents. as the price effects of that demand shift played out, the growth rate of rents would naturally decline toward its earlier trend. finally, multifamily construction is quite high by historical standards, and that supply coming on line has likely also taken some pressure off market rents. pce prices for housing services include both the rents paid by tenants and an imputed rental value for owner - occupied dwellings ( measured as the income the homeowner could have received if the house had been rented to a tenant ). for additional details, see bureau of economic analysis ( 2022 ), “ rental income of persons, ” in nipa handbook : concepts and methods of the u. s. national income and product accounts ( washington : bea, december ), pp. 12 - 1 – 12 - 15, https : / / www. bea. gov / resources / methodologies / nipa - handbook / pdf / chapter - 12. pdf. - 5global supply chain bottlenecks and are generally thought to be less interest sensitive than other sectors such as housing or durable goods. production of these services is also relatively labor intensive, and the labor market remains tight. given the size of this sector, some further progress here will be essential to restoring price stability. over time, restrictive monetary policy will help bring aggregate supply and demand back into better balance, reducing inflationary pressures in this key sector. the outlook turning to the outlook, although further unwinding of pandemic - related distortions should continue to put some downward pressure on inflation, restrictive monetary policy will likely play an increasingly important role. getting inflation sustainably back down to 2 percent is expected to require a period of below - trend economic growth as well as some softening in labor market conditions. economic growth restrictive monetary policy has tightened financial conditions, supporting the expectation of below - trend growth. 5 since