Powell: The Federal Reserve is adjusting its overall policy-making framework

According to Jin Shi, Federal Reserve Chairman Powell stated that the Fed is adjusting its overall policy-making framework to address significant changes in inflation and interest rate prospects after the 2020 pandemic. Powell said, "Since 2020, there have been significant changes in the economic environment, and our assessment will reflect our evaluation of these changes." The Federal Reserve adopted the current framework five years ago and began evaluating it this year. The assessment is unlikely to affect the current way the Federal Reserve sets interest rates. Powell previously stated that the Federal Reserve may complete this process and announce the results before August or September. Powell stated that after the 2020 pandemic, an increase in inflation adjusted "real" interest rates may affect the elements of the Federal Reserve's current framework. He said, "Higher real interest rates may reflect the possibility that inflation may be more unstable in the future than during the crisis period of the 2010s. We may be entering a period of more frequent and potentially more prolonged supply shocks - a daunting challenge for both the economy and central banks