Fed Chair Powell delivers remarks on the economic outlook at Stanford Business School

It is a pleasure to be here today. I will begin with the economy and the road ahead for monetary policy before briefly discussing the Federal Reserve's monetary policy independence. Over the past year, inflation has come down significantly but is still running above the Federal Open Market Committee's (FOMC) 2 percent goal. In February, headline inflation was 2.5 percent over the past 12 months based on the personal consumption expenditures (PCE) index. A year earlier, it was 5.2 percent. Core inflation, which excludes the volatile food and energy components, stood at 2.8 percent; a year ago, it was 4.8 percent. While this progress is welcome, the job of sustainably restoring 2 percent inflation is not yet done. Tight monetary policy continues to weigh on demand, particularly in interest-sensitive spending categories. Nonetheless, growth in economic activity and employment was strong in 2023, as real gross domestic product expanded more than 3 percent and 3 million jobs were created, even as inflation fell substantially. This combination of outcomes reflects significant improvements in supply that offset to some extent the effects on demand of tighter financial conditions. The healing of global supply chains helped address pent-up demand for goods, particularly in sectors that had faced considerable shortages, such as autos. In addition, labor supply increased significantly, thanks to rising participation among 25-to-54-year-olds, as well as a strong pace of immigration. Recent readings on both job gains and in post: Powell: Too Soon to Say Whether Recent Inflation Readings Are More Than Just a Bump post: Powell: Under Current Outlook, Rate Cuts Likely to Be Appropriate This Year -- WSJ Powell: Stronger Data Hasn't Materially Changed Overall Outlook -- WSJ Powell: Job of Bringing Down Inflation Isn't Yet Done -- WSJ Powell:Tight Monetary Policy Is Weighing on Economy -- WSJ post: Powell: Fed Continues to Believe Policy Rate Likely at Peak for This Cycle Powell: to Keep Public’s Trust, Fed Must Avoid ‘Mission Creep’

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