Powell: History Cautions Against Premature Policy Easing

The transcript discusses the Federal Open Market Committee's (FMC) efforts to control inflation by adjusting the federal funds rate. It highlights the current economic conditions, including high inflation and a tight labor market, and outlines recent and potential future monetary policy changes. The need for a restrictive policy stance to maintain price stability is emphasized, with projections indicating a federal funds rate slightly below 4% through 2023.

What was the target range for the federal funds rate set by the FOMC in their July meeting?

• 2.0% to 2.25%

• 2.5% to 2.75%

• 1.5% to 1.75%

• 2.25% to 2.5%

Why is the current economic situation not suitable for pausing or stopping rate increases?

• Because inflation is below 2%

• Because unemployment is rising

• Because the labor market is extremely tight

• Because the economy is in recession

What will the FOMC's decision at the September meeting depend on?

• The stock market performance

• The totality of incoming data and evolving outlook

• The GDP growth rate

• The unemployment rate

What does the historical record caution against in terms of monetary policy?

• Prematurely loosening policy

• Raising interest rates too quickly

• Reducing government spending

• Maintaining a neutral policy stance

What was the median federal funds rate projection through the end of 2023 according to the June SEP?

• Slightly below 5%

• Slightly below 4%

• Slightly below 6%

• Slightly below 3%