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This quote says it: > The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers. The lab

This quote says it: > The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers. The labor force participation rate showed a welcome uptick in August but is little changed since the beginning of the year. FOMC participants expect supply and demand conditions in the labor market to come into better balance over time, easing the upward pressure on wages and prices. The median projection in the SEP for the unemployment rate rises to 4.4 percent at the end of next year, ½ percentage point higher than in the June projections He's expecting the act of raising interest rates to increase unemployment to 4.4%. He's doing this to bring balance to supply and demand for labor, to ease upward pressure on prices. He is also asked directly when he will know when to stop: > So I will answer—I will answer your question directly, but I want to start here today by saying that my main message has not changed at all since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2 percent, and we will keep at it until the job is done. So the way we’re thinking about this is, the overarching focus of the Committee is getting inflation back down to 2 percent. To accomplish that, we think we’ll need to do two things, in particular: to achieve a period of growth below trend; and also some softening in labor market conditions to foster a better balance between demand and supply in the labor market. He directly says he's waiting to see softening of the labor market before stopping the rate hikes.

JumpCrisscross 4y ago
> He's expecting the act of raising interest rates to increase unemployment to 4.4% > He directly says he's waiting to see softening of the labor market before stopping the rate hikes Yes, because we don’t want to ruin the labor market. Right now, rates can be raised without spiking unemployment. The Fed is trying to estimate when that stops happening. A clear signal that the limit has been reached is the labor market actually softening. That doesn’t mean the Fed is trying to raise unemployment. It’s trying to lower inflation, and thinks unemployment may rise as a result of that, though to date it has not.
- im-a-baby 4y ago
  No, that's not what Powell is saying. Read this quote again: > So I will answer—I will answer your question directly, but I want to start here today by saying that my main message has not changed at all since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2 percent, and we will keep at it until the job is done. So the way we’re thinking about this is, the overarching focus of the Committee is getting inflation back down to 2 percent. To accomplish that, we think we’ll need to do two things, in particular: to achieve a period of growth below trend; and also some softening in labor market conditions to foster a better balance between demand and supply in the labor market. Powell says (paraphrasing slightly): "In order to get inflation under 2%, we need to do two things. 1. achieve a period of low growth, and 2. soften the labor market." Low growth and higher unemployment aren't simply side-effects of Powell's policy. These two things are explicitly stated goals.
  - AnimalMuppet 4y ago
    No. That quote still doesn't support your assertion. It clearly says that the actual goal is to control inflation.
    - deleted 4y ago
      [deleted]
  - JumpCrisscross 4y ago
    Would it be correct to say the Fed's goal is to lower economic growth? I don't think so. It's trying to lower inflation and predicting negative, possibly necessary, side effects. But if you read that quote as saying the Fed is trying to raise unemployment, then it's also saying the Fed is trying to lower growth, which is an odd reading to say the least.
    - im-a-baby 4y ago
      I think we're arguing over the definition of goal and side-effect. Let's say I have a goal of running a marathon, so I decide to start jogging every day. Is my daily jogging a side-effect of my goal to run a marathon? I wouldn't say so. Rather, jogging every day is an explicit course I've set out on with the hopes of achieving my main goal. Daily jogging is a sub-goal of the main goal, if you will. This logic can be applied to the Fed. The main goal is to lower inflation, and the chosen course of action (i.e. the sub goals) are to lower economic growth and to increase unemployment. A side-effect would be something akin to knee pain. I can't jog without hurting my knees, but having pain in my knees isn't something I explicitly set out to do. A side-effect of Fed policy would be something like the gilt crises in the UK. Higher US rates increase yields on UK bonds indirectly. But that isn't something the Fed is actively setting out to do.

JumpCrisscross 4y ago

> He's expecting the act of raising interest rates to increase unemployment to 4.4% > He directly says he's waiting to see softening of the labor market before stopping the rate hikes Yes, because we don’t want to ruin the labor market. Right now, rates can be raised without spiking unemployment. The Fed is trying to estimate when that stops happening. A clear signal that the limit has been reached is the labor market actually softening. That doesn’t mean the Fed is trying to raise unemployment. It’s trying to lower inflation, and thinks unemployment may rise as a result of that, though to date it has not.

im-a-baby 4y ago
No, that's not what Powell is saying. Read this quote again: > So I will answer—I will answer your question directly, but I want to start here today by saying that my main message has not changed at all since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2 percent, and we will keep at it until the job is done. So the way we’re thinking about this is, the overarching focus of the Committee is getting inflation back down to 2 percent. To accomplish that, we think we’ll need to do two things, in particular: to achieve a period of growth below trend; and also some softening in labor market conditions to foster a better balance between demand and supply in the labor market. Powell says (paraphrasing slightly): "In order to get inflation under 2%, we need to do two things. 1. achieve a period of low growth, and 2. soften the labor market." Low growth and higher unemployment aren't simply side-effects of Powell's policy. These two things are explicitly stated goals.
- AnimalMuppet 4y ago
  No. That quote still doesn't support your assertion. It clearly says that the actual goal is to control inflation.
  - deleted 4y ago
    [deleted]
- JumpCrisscross 4y ago
  Would it be correct to say the Fed's goal is to lower economic growth? I don't think so. It's trying to lower inflation and predicting negative, possibly necessary, side effects. But if you read that quote as saying the Fed is trying to raise unemployment, then it's also saying the Fed is trying to lower growth, which is an odd reading to say the least.
  - im-a-baby 4y ago
    I think we're arguing over the definition of goal and side-effect. Let's say I have a goal of running a marathon, so I decide to start jogging every day. Is my daily jogging a side-effect of my goal to run a marathon? I wouldn't say so. Rather, jogging every day is an explicit course I've set out on with the hopes of achieving my main goal. Daily jogging is a sub-goal of the main goal, if you will. This logic can be applied to the Fed. The main goal is to lower inflation, and the chosen course of action (i.e. the sub goals) are to lower economic growth and to increase unemployment. A side-effect would be something akin to knee pain. I can't jog without hurting my knees, but having pain in my knees isn't something I explicitly set out to do. A side-effect of Fed policy would be something like the gilt crises in the UK. Higher US rates increase yields on UK bonds indirectly. But that isn't something the Fed is actively setting out to do.