Fed's Powell: We don't know where labor force participation will settle

Author: Adam Button | Category: Central Banks

Comments from the Fed Chair on Day 2 of Humphrey Hawkins

  • It will take a number of years to figure out labor force participation
  • Many people retired during the pandemic
  • Would be prepared to deploy counter-cyclical capital buffer if needed
  • Financial institutions are well capitalized
  • Difference between Treasury and MBS purchases is not a large one
I believe US labor force participation has more room to run than the Fed believes, and here is why.

  • Inflation is not tied to usual factors like a tight labor market or tight economy
  • This is a shock to the system associated with reopening
  • The challenge the Fed is confronting is how to react to this inflation which is larger than expected
  • This particularly type of inflation is unique in history
  • Fed will continue to evaluate the risks that affect inflation
  • A handful of things account for 'essentially all of the overshoot' in inflation

Invest in yourself. See our forex education hub.
By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose