In a recent address, Jerome Powell, the Chair of the Federal Reserve, highlighted the importance of adaptability in economic forecasting, especially in the context of the unpredictable post-pandemic economy.
Speaking at a conference marking the 100th anniversary of the Federal Reserve's Research and Statistics Division, Powell praised the division's rigorous approach but stressed the need for flexibility and innovative thinking beyond conventional models.
Powell acknowledged the utility of economic models in understanding historical economic trends but noted that even the most advanced models can be taken by surprise by the economy's behavior, especially during times of unforeseen crises like a global financial crisis or a pandemic.
He refrained from commenting on the current economic outlook or potential shifts in interest rate policies.
The Federal Reserve recently maintained interest rates within a range of 5.25% to 5.5%, marking a pause in rate changes for two consecutive meetings for the first time in nearly two years.
This decision follows a series of rate hikes aimed at curbing inflation over the past 18 months. Despite these efforts, inflation continues to exceed the Fed's 2% target, though the economy has shown unexpected resilience.
However, there are indications of a possible slowdown in the labor market. The latest jobs report for October revealed lower-than-expected job growth, with 150,000 new jobs added and an increase in the unemployment rate to 3.9%.