Questions about labor market strength and Fed committee dynamics during energy shock.
Interviewer
Federal Reserve Official
Labor market needs additional support, which is why I dissented for rate cut. We look 12-18 months ahead, not at daily oil price moves.
Oil futures curve has changed significantly, with December contract moving from 60s to threatening 90s.
Interviewer
Federal Reserve Official
Acknowledged oil price increase and raised inflation forecast to 2.7%, but too early to conclude it bleeds beyond headline inflation. Higher oil prices depress demand by redirecting consumer spending.
What circumstances would require raising interest rates?
Interviewer
Federal Reserve Official
Would need to see oil shock bleeding into inflation expectations beyond first year, causing second-round effects or wage-price spiral. First-round effects aren't traditionally responded to.