Federal Reserve Chair Jerome H. Powell said central banks have both the tools and determination to curb rapid inflation, but the road to price cuts can be painful. Admitted that there is.
“The process of lowering inflation to 2% involves some pain, but in the end the most painful thing was that we couldn’t deal with it and inflation took hold,” Powell said in an interview. At the marketplace on Thursday.
Powell was confirmed by the Fed’s leaders on Thursday afternoon for a second four-year term. He and his colleagues are facing difficult situations. The economy is strong and employment is plentiful, but inflation is at almost the fastest pace in 40 years. The central bank has a mission to promote full employment and price stability and is responsible for slowing it down.
Consumer prices 8.3 percent up Inflation eased slightly from the previous year to April, but details in the report suggest that price pressures continue to rise.
The Federal Reserve is starting to raise interest rates to cool the economy. Largest increase since 2000 Early this month. Powell and his colleagues suggest that they will continue to push up borrowing costs as they seek to balance supply and demand, reduce inflation, and curb spending and employment.
The Federal Reserve chairman said at a press conference last week that he seemed to have ruled out a significant 0.75% rate hike for the foreseeable future, although such a major move is not currently under consideration, but the economy. Revealed that it may be appropriate if it surprises the authorities. In a negative way.
“If things go better than expected, we’re ready to do less,” Powell said. “If they get worse than we expect, we are ready to do more.”
The looming question for the Fed is whether it can slow the economy enough to curb inflation without accelerating a recession. What Powell and his colleagues repeatedly admit can be a challenge.
“There are huge, geopolitical events happening around the world, which will play a very important role in the economy next year or so,” Powell said Thursday. “So the question of being able to perform a soft landing can actually depend on factors that we have no control over.”
