Fed Chair Powell says policy rate may not have to rise as far as otherwise due to tightened bank credit conditions

• Possible there will be continued supply shocks but hard to predict.


• Positive supply shocks during globalization probably did help keep inflation low; those positive supply shocks are not likely to be repeated.


• Cannot know how persistent pandemic shocks will be or what others might come along.


• For policymakers central banks are still responsible for price stability regardless of supply shocks.


• Labour market slack and inflation is not different from before the pandemic.


• Labour market slack did not figure into early inflation, but do think it will be a factor going forward.


• Inflation in non-housing services is particularly susceptible to labour outcomes.


• Natural rate of unemployment probably rose sharply during the pandemic; Phillips curve may also have steepened.


• Vacancies may have been a more important indicator during the pandemic.

19 May 2023 - 16:15- Fixed IncomeImportant- Source: Newswires