According to him, the labor market is significantly cooler than a year ago, but at the same time it is still in a satisfactory condition with 4.2 percent unemployment. From Powell’s perspective, one thing is certain: there is no inflationary pressure coming from the labor market. However, a further deterioration in the labor market is not a prerequisite for achieving the inflation target. “This is a good job market, we want to keep it that way.”
Apparently the growing economic dynamism plays a role in the recalibration of monetary policy, which at the same time keeps prices high. Central bankers now believe the economy will grow by 2.5 percent this year instead of two percent. The inflation target of two percent will therefore no longer be achieved this year and will also be missed next year. This year it will remain at 2.8 percent, only to slip to 2.5 percent next year, according to the central bankers’ averaged projections.
