Powell says the Fed will not hesitate to keep raising rates until inflation comes down

Jerome Powell, Chairman of the U.S. Federal Reserve, is arriving in Washington, D.C., for a Senate Banking Committee Hearing on Thursday, 15 July 2021.
Bloomberg – Getty Images| Bloomberg | Getty Images

Federal Reserve Chair Jerome PowellHe reiterated his determination to reduce inflation and said Tuesday that he would back interest rate hikes until prices fall back towards a healthy level.

The Wall Street Journal was told by the leader of central banks that “if that means moving beyond broadly understood levels neutral, we won’t hesitate,” in a livestreamed interview. “We’ll go till we feel that financial conditions are appropriate, then we expect inflation to drop.

“We will get there.” “There won’t any hesitation about it,” he said.

In the beginning of this month the Fed raised benchmark borrowing ratesBy half a percent point, 2022’s second inflation increase is approximately 40-year high.

Powell stated that Powell believed similar moves of 50 basis points would be made at the ensuing meetings, so that Powell could continue to speak out after that hike. economic conditionsThey are the same now as before.

He reiterated Tuesday his determination to bring inflation closer the Fed’s goal of 2%, but cautioned that this might be difficult and could cost him dearly. a 3.6% unemployment rateThat is just above its lowest level since 1960.

His words were, “You’d still be able to have a strong labor force if you had a higher unemployment.” As soft as it sounds, there are many possible paths for a soft landing. “Our job is not to handicap odds. It’s to strive to get there.”

Due to supply constraints and spread of the omicron Covid variation, the U.S. economy experienced a contraction of 1.4% in its first quarter 2022. war in Ukraine.

Tighter monetary policies have raised concerns of a deeper downturn, and have prompted a sell-off at Wall Street. The Fed has stopped its monthly bond-buying program (also known as quantitative ease) and has stopped raising interest rates by 75 basis points. It will also begin to shed some assets worth $9 trillion starting next month.

Powell stated that he hopes the Fed will be able to achieve its inflation targets without destroying the economy.

You’d have a stable labor market even if the unemployment rate were to rise a bit. As softish, I think there are several paths you could take to achieve a soft landing. He said that our job is not to make the odds favorable, but to attempt to do so.

While he acknowledged that there could be pain in restoring price stability, he said that the labor market must remain strong with lower unemployment and higher wages.

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