Returning to Price Stability: In It to Win It

Because the Super Bowl was played just this past Sunday, I titled my talk “In It to Win It” because the Fed is committed to getting inflation back to our 2 percent goal. But, of course, returning the economy to price stability is not a game: it is an imperative for sustaining healthy labor markets and our standard of living. The very high inflation the economy has experienced for almost two years has been painful for households and businesses, especially those with fewer resources, as they have had to cope with increasing costs and make hard choices about where to spend their money. Organizations that offer services to lower-income households have also been struggling with higher costs, limiting their ability to offer aid to as many people. High inflation also imposes longer-run costs on our economy because it distorts the decisions households and businesses make about building human capital and investing in R&D, plants and equipment, and other forms of physical capital. These decisions ultimately affect the pace of innovation, productivity growth, the potential growth rate of the economy, and improvement in our living standards. Because of the negative costs of high inflation, the Fed is resolved and focused on returning to price stability in a timely way: we are in it to win it.