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Powell Resets Fed Goals for Job Market in Light of Covid Reality

  • Returning to pre-pandemic may not be practical today, he says
  • Full employment is subjective and an FOMC decision, he says
Jerome Powell

Jerome Powell

Photographer: Matt McClain/The Washington Post/Bloomberg

Federal Reserve Chair Jerome Powell has tempered his ambition to restore the labor market to its pre-pandemic strength, as the central bank confronts surging inflation and a workforce still constrained by Covid-19.

The Fed on Wednesday reiterated that reaching full employment was an expected step for raising interest rates, but officials also penciled in three hikes in 2022. While about 3.9 million workers are still missing on payrolls, Powell said maximum employment needs to be defined in the context of the “reality” of today and that the U.S. is already very close to the mark.