While I expect that the labor market will remain strong as the FOMC continues to tighten monetary policy, these actions do not come without risk. But in my view, our number one responsibility is to reduce inflation. Maintaining our commitment to restore price stability is the best course to support a sustainably strong labor market.
The Fed’s credibility, earned over decades of low inflation, is a powerful policy tool that is critical to our long-term success. If that credibility erodes, it must be re-earned. As a step toward that goal, I also supported the Committee’s action to begin reducing the Fed’s balance sheet, which is providing unneeded economic stimulus making inflation worse.