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Powell says the Fed will not hesitate to continue raising rates until inflation goes down.

Federal Reserve Chairman Jerome Powell testifies in front of the House Financial Services Commission on the “Semi-Annual Monetary Policy Report to Congress” held in Washington, DC on March 3, 2022.

Jonathan Ernst | AFP | Getty Images

Federal Reserve Chair Jerome Powell On Tuesday, he stressed his determination to lower inflation, saying he would help raise interest rates until prices began to return to healthy levels.

“If it involves moving beyond the widely understood level of neutrality, we don’t hesitate to do it,” a central bank leader told The Wall Street Journal. In a livestreaming interview.. “We will go until we feel we are in a place where we can say that our finances are in the right place. We will see inflation go down.

“I’m going to that point. I don’t hesitate about that,” he added.

Earlier this month Fed raises benchmark borrowing rate The second increase in 2022 is 0.5 percentage points, as inflation is at its highest level in about 40 years.

Following that increase, Powell said a similar 50 basis point move is likely to take place at the next meeting. economic situation It remained the same as they are now.

On Tuesday, he repeated his commitment to bring inflation closer to the Fed’s 2% target, which was not easy, 3.6% unemployment rate It’s just above the lowest level since the late 1960s.

“Even if the unemployment rate rises a few ticks, there will still be a strong labor market,” he said. “I think there are many plausible ways to get soft, as I said soft landing. Our job is not to handicap the odds, but to try to achieve them.”

In the US economy, growth slowed at a pace of 1.4% in the first quarter of 2022.This is primarily due to ongoing supply-side constraints, widespread use of Omicron Covid variants, and War in Ukraine..

However, monetary tightening policies have increased concerns about a sharper recession and have led to aggressive sellouts on Wall Street. In addition to the 75 basis points of interest rate hikes, the Fed will also suspend its monthly bond purchase program, also known as quantitative easing, and begin cutting some of its $ 9 trillion assets acquired next month.

Powell said he still wants the Fed to reach its inflation target without stagnating the economy.

“Even if the unemployment rate rises a few ticks, there is still a strong labor market. I think there are many plausible ways to make it soft, as I said soft landing. Our job is odds. It’s not about handicap, it’s about trying to achieve it. “

“It can be some pain to restore price stability,” he added, but said the low unemployment and high-wage labor markets should remain strong.

Powell says the Fed will not hesitate to continue raising rates until inflation goes down.

Source link Powell says the Fed will not hesitate to continue raising rates until inflation goes down.

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