Powell Says US Economy Can Handle Tighter Fed Policy

The Fed is committed to reducing inflation and restoring price stability for American families and businesses. Current inflation rates are above the target, with economic activity showing mixed signals. The labor market remains tight, with high job vacancies and wage growth. The Fed has raised interest rates and plans to reduce its balance sheet to address inflation. Future policy decisions will depend on economic data, with a focus on achieving a 2% inflation goal. The Fed aims to maintain transparency and adapt to economic changes while minimizing uncertainty.

What is the Fed's primary goal in addressing high inflation?

• To reduce government spending

• To stabilize prices for American families and businesses

• To increase employment opportunities

• To boost international trade

Which global event has contributed to the surge in crude oil prices?

• The Paris Climate Agreement

• The Russia-Ukraine conflict

• Brexit

• The US-China trade war

What has been the trend in the US labor market according to the Fed?

• Increasing unemployment rates

• Decreasing job vacancies

• Declining labor demand

• Elevated wage growth

How has the Fed responded to the tight labor market and high inflation?

• By reducing government taxes

• By decreasing interest rates

• By increasing the federal funds rate

• By expanding the balance sheet

What is the Fed's approach to making monetary policy decisions in an uncertain environment?

• Making decisions based on political influences

• Following a fixed policy regardless of changes

• Relying solely on historical data

• Adapting policy based on incoming data and economic outlook

What is the Fed's strategy for handling its balance sheet?

• Maintaining the current size

• Reducing the size of the balance sheet

• Increasing securities holdings

• Transferring holdings to foreign banks

What is the Fed's overarching focus in its monetary policy?

• To increase government revenue

• To achieve maximum employment and price stability

• To support international economic growth

• To reduce national debt