Inflation in the US is three times higher than the 2% target set by the Fed, with Powell pointing out that the Russian invasion of Ukraine and the lockdown for the Covid-19 pandemic in China are putting increased pressure.
The US Federal Reserve is not trying to cause a recession to tame inflation, but is fully committed to bringing prices under control even if it risks an economic downturn, Fed Chairman Jerome Powell said today.
“We are not trying to provoke and I do not think we will have to provoke a recession,” Powell told a Senate Banking Committee hearing. However, he acknowledged that the recession was “certainly a possibility” and that international events in recent months had made it harder to reduce inflation without causing a recession.
“It is necessary to fight inflation if we want to have a lasting period of strong labor market conditions that will benefit everyone,” Powell said. The Fed will look for “serious evidence” in the coming months of a slowdown in inflationary pressures before easing interest rate hikes it launched three months ago.
Inflation in the US is three times higher than the 2% target set by the Fed, with Powell pointing out that the Russian invasion of Ukraine and the lockdown for the Covid-19 pandemic in China are putting increased pressure.
One week ago, the Fed raised its interbank rate by 75 basis points, the largest increase since 1994, and left open the possibility of repeating the move by the end of the year.
This sharp rise in interest rates has sparked widespread concerns about a recession and a weakening labor market.
The head of the Fed did not rule out the possibility of even raising the interbank interest rate by 100 basis points if such a move is deemed necessary, stressing that policymakers must
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