The Dallas Area Chamber of Commerce, in partnership with the Federal Reserve Bank of Dallas and the Dallas-Fort Worth World Affairs Council, invites community members to participate in a conversation with Federal Reserve Chairman Jerome Powell.

Powell said in a speech early Friday morning Beijing time that if economic data allows, it would be wise to cut interest rates slowly, which triggered a decline in global markets. $BTC $ETH

Here is the full text of his prepared speech:

Good afternoon. Thank you to the World Affairs Council, the Federal Reserve Bank of Dallas, and the Dallas Area Chamber of Commerce for your kind invitation. It is a pleasure to be here today. I will begin by speaking briefly about the economy and monetary policy.

Looking back, the U.S. economy has experienced a global epidemic and its subsequent effects, and has now returned to good shape. The economy has made significant progress toward the twin missions we pursue—maximum employment and price stability.

The labor market remains solid. Inflation has retreated substantially from its peak, and we view it as on a sustainable path toward our 2% objective. We are committed to maintaining a strong economy by returning inflation to our objective while supporting maximum employment.

Recent economic data

Economic growth

The economy has performed quite well recently, the best among the world's major economies. Last year, economic output grew by more than 3%, and has expanded at a strong 2.5% so far this year. Consumer spending has been strong, supported by rising disposable income and strong household balance sheets. Business investment in equipment and intangible assets has accelerated over the past year. However, activity in the housing sector has been weak.

Improved supply conditions have supported the economy's strong performance. The labor force has expanded significantly, and productivity growth over the past five years has exceeded the level of the two decades before the pandemic, increasing the economy's productive capacity, thereby achieving rapid economic growth without causing overheating.

Labor Market

The labor market remains solid, having retreated from its marked overheating a few years ago and is now back to normal levels on many indicators consistent with our employment goals. The current number of job openings is slightly higher than the number of unemployed people looking for work.

Employee turnover is below pre-pandemic levels, having reached an all-time high two years ago. Wages are still rising, but at a more sustainable pace. Hiring is slower than at the start of the year.

The most recent October jobs report was significantly affected by hurricanes and labor strikes, making it difficult to get a clear signal. The unemployment rate is 4.1%, significantly higher than last year, but has leveled off in recent months and remains historically low.

Inflation

The cooling of the labor market is no longer a significant source of inflationary pressures. This cooling, along with significant improvements in broad supply conditions, has allowed inflation to fall sharply over the past two years from a peak of over 7% in mid-2022. The improvement in inflation was across the board.

Total PCE prices rose 2.3% for the year through October, based on the Consumer Price Index and other data released this week, while core PCE prices, which exclude more volatile items such as food and energy, rose 2.8%.

Core measures of goods and services inflation excluding housing have declined rapidly over the past two years, returning to levels closer to our objectives. We expect these measures to fluctuate within their recent ranges, but we will monitor them closely to ensure they remain within these ranges. At the same time, we are also closely tracking the gradual decline in housing services inflation, an area that has not yet fully normalized.

Inflation has moved closer to our 2 percent longer-run objective, but it is not yet there. We are determined to accomplish this mission. With labor market conditions broadly balanced and inflation expectations well-behaved, I expect inflation to continue to decline toward our 2 percent objective, albeit with some volatility.

Monetary Policy

In light of progress toward our inflation goal and cooling labor market conditions, last week my colleagues and I on the Federal Open Market Committee took a further step by lowering the policy rate by one-quarter percentage point to make policy less restrictive.

We believe that with appropriate adjustments to the policy stance, the strength of the economy and labor market can be maintained and inflation can be sustainably reduced to 2%. We believe that the risks to achieving employment and inflation goals are roughly balanced, and we are mindful of both risks. We are aware that reducing policy constraints too quickly could hinder progress on inflation. At the same time, reducing policy constraints too slowly could unnecessarily weaken economic activity and employment.

We are gradually guiding policy toward a more neutral setting. But the path to that goal is not predetermined. We will carefully assess the latest data, the economic outlook, and the balance of its risks as we consider further adjustments to the target range for the federal funds rate.

The economy is not sending any signals that we need to cut interest rates faster. The current strength of the economy allows us to be cautious in our decisions. Ultimately, the path of the policy rate will depend on new data and the evolution of the economic outlook.

We are deeply committed to the dual mandate given to us by Congress: maximum employment and price stability. Our goal is to return inflation to our goal without triggering the painful jobless gains that have accompanied high, repressive inflation in the past.

This would be a desirable outcome for the communities, families, and businesses we serve, and while the mission is not yet complete, we have made significant progress toward achieving this outcome.

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