Jerome Powell: Monetary policy at a time of uncertainty and tight labor markets

Speech by Mr Jerome H Powell, Member of the Board of Governors of the Federal Reserve System, at the ECB Forum on Central Banking "Price and Wage-Setting in Advanced Economies", Sintra, 20 June 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Nine years into an expansion that has sometimes proceeded slowly, the U.S. economy is performing very well. Growth is meaningfully above most estimates of its long-term trend-though admittedly, that trend is not as strong as we would like it to be. The labor market is particularly robust, with unemployment at its lowest level since April 2000. Inflation has moved up close to our 2 percent objective, although we have yet to see it remain near that objective on a sustained basis.

Today, most Americans who want jobs can find them. High demand for workers should support wage growth and labor force participation-the latter a measure on which the United States now lags most other advanced economies. A tight labor market may also lead businesses to invest more in technology and training, which should support productivity growth. And groups such as some racial and ethnic minorities that still have higher unemployment and lower participation rates could see increasing benefits from a tight labor market. In short, there is a lot to like about low unemployment.