Powell Says Fed 'Proceeding Carefully' on Policy Path

The transcript discusses how monetary policy impacts financial conditions, which in turn affect economic activity, employment, and inflation. It highlights the recent tightening of financial conditions and the role of bond yields. The speaker emphasizes the commitment to returning inflation to 2% and the challenges of balancing the risks of over-tightening or under-tightening monetary policy. The approach to policy decisions is cautious, considering uncertainties and the evolving economic outlook.

How do broader financial conditions influence the economy?

• They only affect employment.

• They only affect inflation.

• They affect economic activity, employment, and inflation.

• They have no impact on the economy.

What has been a significant factor in the recent tightening of financial conditions?

• Foreign exchange rates

• Long-term bond yields

• Stock market fluctuations

• Short-term interest rates

What is the target inflation rate that the committee is committed to achieving?

• 4%

• 2%

• 3%

• 1%

What could be a consequence of tightening monetary policy too little?

• Increased unemployment

• Economic boom

• Entrenched above-target inflation

• Deflation

What factors will the committee consider in making future policy decisions?

• Public opinion

• Incoming data, evolving outlook, and balance of risks

• Political pressure

• Global economic trends