Quote:
Originally Posted by melpetezrinski
"Jerome Powell, head of the Federal Reserve, has said that the goal is for interest rates to be more than the inflation rate." Please provide your source!
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This is from the transcript of Powell's speech on 9/21/22 and questions answered after the speech:
CHAIR POWELL. Well, so, again, we believe that we need to raise our policy stance overall to a level that is restrictive—and by that I mean, is meaningfully, putting meaningful downward pressure on inflation. That’s what we need to see in the stance of policy. We also
September 21, 2022 Chair Powell’s Press Conference FINAL
Page 10 of 21
know that there are long and variable lags, particularly as they relate to inflation. So it’s a challenging assessment. So, what do you look at? You look at broader financial conditions, as you know; you look at where rates are, real and nominal in some cases; you look at credit spreads; you look at financial conditions indexes.
We also, I would think—and you see this in the—this is something we talked about today in the meeting and talk about in all of our meetings. And you see this, I think, in the Committee forecast. You want to be at a place where real rates are positive across the entire yield curve.
"real rates are positive across the entire yield curve" means that the interest rate minus the inflation rate is a positive number.