Fed's Powell: U.S. Economy and Monetary Policy in 'Pretty Good Place'

Federal Reserve Chairman Jerome Powell recently discussed the current state of the U.S. economy and the Federal Reserve's monetary policy. Powell stated that the Fed has the flexibility to let incoming data guide its policy decisions, emphasizing that decisions are made on a meeting-by-meeting basis. Despite recent readings on job gains and inflation being higher than expected, Powell believes these do not materially change the overall economic picture. He also mentioned that monetary policy is effectively working and described it as tight. Powell highlighted signs of labor market rebalancing, including data on quits, job openings, employer and worker surveys, and a gradual decline in wage growth. Additionally, he pointed out that the economy has been short on labor and probably still is, but there may be more supply-side gains to be had. Powell also touched on the potential of AI to increase productivity, though he noted that its impact is not yet visible. He concluded by stating that monetary policy has reached 'a pretty good place,' indicating a positive outlook on the efforts to stimulate new demand and supply through supply-side recovery.