Chairman of the US Federal Reserve Jerome Powell speaks at a press conference in Washington, DC, May 4, 2022.

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Federal Reserve Chairman Jerome Powell warned on Thursday that controlling inflation could cause some economic pain, but remains a top priority for him.

Powell said he could not promise a so-called soft landing for the economy as the Fed raises interest rates to stifle rising prices, which are approaching the fastest pace in more than 40 years.

“So soft landing is actually just returning to 2% inflation, while maintaining a strong labor market. And it is quite difficult to do now, for several reasons, ”the head of the central bank said in an interview with Marketplace. .

He noted that in a tough labor market that encourages wage growth, avoiding a recession, which is often accompanied by aggressive tightening of policies, will be a challenge.

“So it will be difficult, it will not be easy. Nobody here thinks it will be easy,” he said. “However, we believe there are ways … for us to get there.”

The remarks were released the same day the Senate overwhelmingly confirmed Powell for a second term, nearly seven months after President Joe Biden first nominated.

The first on his list of priorities for the second term will be to control price inflation, which in April was 8.3% per annum, just below the more than 40-year high recorded in March.

Last week, the Fed approved an increase in the interest rate by half a percentage point, following a quarter-point increase in March. Markets expect the Federal Open Market Committee, which sets rates, to rise another half a point in June and continue to raise benchmarks until the end of the year.

For his part, Powell said he understands the extra pain that higher rates can cause, but said the Fed should act aggressively.

“Our goal, of course, is to return inflation to 2% without the economy entering a recession, or, so to speak, while maintaining a strong enough labor market,” he said. “That’s what we’re trying to achieve. I think the one thing we really can’t do is not restore price stability, however. Nothing in the economy works, the economy doesn’t work for anyone without price stability.”

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Powell has come under some criticism for delaying the Fed in raising rates and ending a bond-buying program, even as inflation rises. Moreover, at his press conference after last week’s meeting, he made remarks that were interpreted as taking more aggressive steps, such as an increase of 75 basis points.

In an interview with Marketplace, he said he was “not sure how much of a difference it would make” to act faster, adding: “We did everything we could.”

“Now we see the picture clearly and we are determined to use our tools to get us back to price stability,” Powell said.

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