Fed Chair Powell: Reiterates expectations that at the coming meeting will begin balance sheet reduction

Fed Chair Jerome Powell reiterated on Monday his expectations that at the upcoming Fed meeting, the central bank will begin the process of balance sheet reduction, a process to last three years. Monetary quantities are not an important part of the inflation story at this time, Powell noted, saying that having a strong labour market is important and a big focus. The current labour market is much tighter and hotter than before the pandemic, Powell added. 

Additional Remarks:

"In principle less accommodative monetary policy could reduce demand and stabilize prices."

"Ultimately, if you want a strong labor market, you have to have price stability."

"What we are seeing from Ukraine looks more like a classic supply shock."

"But want to be very careful to get monetary policy where it needs to be and not comfortable with looking through the shock."

"I don't have a test for what would trigger a 50bps rise."

"We may well reach the conclusion that we need to move more quickly."

"If we do reach that conclusion, we will do so."

"It's not necessarily for monetary policy to do 100% of the work against inflation."

"We are going to be looking for actual progress on supply chains before reacting."