Bailey at the Treasury Select Committee:
- Need to keep inflation pressure from labor market in mind, that influenced my thinking on Dec rate hike
- Some aspects of inflation outght to be transitory
- The tightness of the labor market is the first, second and third thing businesses want to talk to me about
- We don't know if older workers will come back or retire
- It's tough to strip out effect of covid and Brexit from labor market size
- We are seeing some evidence of second-round inflation effects
- There is an argument that higher inflation could retrain demand in the economy and bring inflation back down
- Our view of QE is that it works much better in some places than other, particularly in places with large financial markets
- It's reasonable to think that effect of quantitative tightening in symmetric
Bailey was careful to say that he didn't want his comments -- particularly speculation on inflation dynamics -- to indicate how he will vote on rates.
