Jerome Powell: Possible that We’re Going into a More Inflationary Period, But It’s ‘Unknowable’

WESTIN Do you think ░░░░░░░░ re entering into a ░░░░░░░░ phase in monetary policy ░░░░░░░░ had the Volcker disinflation ░░░░░░░░ think you refer to ░░░░░░░░ as then we had ░░░░░░░░ of inflation targeting for ░░░░░░░░ time there was concern ░░░░░░░░ secular stagnation we were ░░░░░░░░ the zero bound as ░░░░░░░░ said we were concerned ░░░░░░░░ that And then we ░░░░░░░░ the pandemic and we ░░░░░░░░ the real problem with ░░░░░░░░ What s the next ░░░░░░░░ look like What what ░░░░░░░░ how would you describe ░░░░░░░░ Powell What we ve ░░░░░░░░ through is in all ░░░░░░░░ the advanced economies around ░░░░░░░░ world was a period ░░░░░░░░ the effective lower bound ░░░░░░░░ proximity of interest rates ░░░░░░░░ free interest rates to ░░░░░░░░ effective lower bound which ░░░░░░░░ zero or a little ░░░░░░░░ less was a big ░░░░░░░░ for monetary policy and ░░░░░░░░ just rates came down ░░░░░░░░ down and down And ░░░░░░░░ problem is if if ░░░░░░░░ are going to be ░░░░░░░░ to zero in good ░░░░░░░░ then how do you ░░░░░░░░ And so central banks ░░░░░░░░ the power of their ░░░░░░░░ important tool which is ░░░░░░░░ rates This was a ░░░░░░░░ of a vast literature ░░░░░░░░ monetary policy research for ░░░░░░░░ years And and you ░░░░░░░░ the the the most ░░░░░░░░ answer was some kind ░░░░░░░░ a makeup strategy So ░░░░░░░░ would credibly promise to ░░░░░░░░ run inflation a little ░░░░░░░░ hot and above 2 ░░░░░░░░ and that would anchor ░░░░░░░░ at 2 percent to ░░░░░░░░ the times when it ░░░░░░░░ below So that was ░░░░░░░░ very serious problem which ░░░░░░░░ books worth of research ░░░░░░░░ comes the pandemic then ░░░░░░░░ the response to the ░░░░░░░░ and then comes the ░░░░░░░░ inflation not just in ░░░░░░░░ United States but everywhere ░░░░░░░░ question is is that ░░░░░░░░ secular change or are ░░░░░░░░ these factors that had ░░░░░░░░ us to that place ░░░░░░░░ they still out there ░░░░░░░░ to come back And ░░░░░░░░ know books are written ░░░░░░░░ this subject now You ░░░░░░░░ can argue that and ░░░░░░░░ have argued that that ░░░░░░░░ the last 20 years ░░░░░░░░ the pandemic were kind ░░░░░░░░ a perfect storm of ░░░░░░░░ And now that s ░░░░░░░░ gone and we re ░░░░░░░░ into a more inflationary ░░░░░░░░ that will be characterized ░░░░░░░░ more supply shocks and ░░░░░░░░ like that and therefore ░░░░░░░░ more inflationary pressure So ░░░░░░░░ we going into such ░░░░░░░░ I don t know ░░░░░░░░ mean all I can ░░░░░░░░ you I think it ░░░░░░░░ unknowable and you know ░░░░░░░░ theorists and researchers have ░░░░░░░░ views on this It ░░░░░░░░ not it s not ░░░░░░░░ you can settle in ░░░░░░░░ We ll have to ░░░░░░░░ I think our our ░░░░░░░░ is right now trying ░░░░░░░░ achieve a sufficiently restrictive ░░░░░░░░ of of policy to ░░░░░░░░ inflation down to 2 ░░░░░░░░ over time that s ░░░░░░░░ we re really focused ░░░░░░░░