​​Feder Chairman Powell said in his latest speech on Thursday that the U.S. economy remains stable against the backdrop of economic slowdown and increased policy uncertainty, the job market is becoming more balanced, and inflation has fallen but is still higher than the target.New tariff policies are expected to boost short-term inflation, and long-term expectations are still anchored. The current policy stance is mainly "waiting and watching" to ensure that inflation and employment are balanced.

Powell's speech

Thank you for your introduction, I am looking forward to today's exchange, Professor Rajan. First, I will briefly talk about the prospects of economic and monetary policy.

At the Fed, we are always focused on the “dual mission” goal that Congress has given us: to achieve maximum employment and price stability. Despite rising uncertainty and increasing downside risks, the US economy as a whole is still in a steady state.The labor market has reached or approached its maximum employment level. Although inflation has dropped significantly, it is still slightly higher than our 2% target.

Latest economic data

Regarding the latest data, we will get preliminary readings of the first quarter GDP in a few weeks. Judging from the data currently available,Economic growth in the first quarter slowed down from last year's strong level.Although car sales performed strongly, overall consumer spending increased only moderately. In addition, strong imports in the first quarter will be a drag on GDP growth as companies try to import ahead of potential tariffs.

Surveys from families and businesses show thatConfidence has dropped sharply, and the high uncertainty about the outlook has been mainly caused by trade policy concerns.External forecast agencies' expectations for full-year economic growth are being lowered.The overall view tends to slow down, but it still maintains positive growth.We are closely following the evolution of this data and watching how families and businesses adapt to these new changes.

In terms of the labor market, non-agricultural employment increased by about 150,000 jobs per month in the first three months of this year. Although growth slowed compared to last year, the low layoffs and slower labor growth kept the unemployment rate in a low and stable range. At the same time, the ratio of job openings to job seekers is slightly higher than 1, which is close to the pre-epidemic level. Wage growth, although moderate, still outperformed inflation. Overall,The labor market is stable, basically in a balance of supply and demand, and has not become the main source of inflation.

In terms of prices, inflation fell sharply from the epidemic high point in mid-2022 and was not accompanied by a sharp rise in the unemployment rate, which was a common phenomenon in the past controlling high inflation. The current rate of inflation decline is moderate, with the latest data still above the 2% target. According to data released last week, PCE rose 2.3% in March, and core PCE rose 2.6% if food and energy were excluded.

Looking ahead, the new government is promoting major policy changes in four major areas: trade, immigration, finance and regulation.These policies are still in the form of a stage and their impact on the economy is highly uncertain.As we understand, we will continue to update the evaluation.The tariff hikes announced so far exceed market expectations, and their economic impact may also exceed expectations, including higher inflation and slower growth.Short-term inflation expectations have significantly risen both in surveys and market indicators, and survey respondents generally attribute it to tariffs. However, long-term inflation expectations remain roughly stable, and market implicit inflation expectations (breakven) remained close to 2%.

Monetary Policy

As we gain a deeper understanding of these policy changes, we will be able to more accurately judge their impact on the economy and thus guide monetary policy decisions. To be sure,Tariffs will almost inevitably push up short-term inflation, and their impact may even last longer. Whether this persistent inflation impact can be avoided depends on three factors: the scale of the impact, the length of time it is transmitted to the price, and whether we can firmly anchor long-term inflation expectations.

Our role is to ensure that long-term inflation expectations remain stable and prevent one-time price increases from evolving into persistent inflation problems. In fulfilling this responsibility, we weigh the goals of maximum employment and price stability. We know that without price stability, a long-term strong job market cannot be achieved, which will ultimately harm all Americans.We may also face a challenging situation - two goals conflict. In that case, we will evaluate the distance from each goal from the economy and consider the time difference achieved by each individually.

Conclusion

As Chicago native Ferris Bueller once said: "Life is very fast."We are in a favorable position where we can "live and wait" and do not rush to adjust our monetary policy stance before we get a clearer signal.We will continue to analyze the constantly updated data, prospect changes and risk balance. We know that high inflation or unemployment can cause serious harm to communities, families and businesses. We will make every effort to achieve our mission of maximum employment and price stability.

Thank you everyone, I look forward to the next question session.