Chair of the Federal Reserve Jerome Powell emphasized his commitment to bringing inflation down, saying Yesterday that he will support interest rate hikes until costs start falling toward a healthy level.
The central bank leader said, “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that. We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down. We’ll go to that point. There won’t be any hesitation about that.”
Fed has increased benchmark borrowing rates by 50 basis points, the second hike of 2022 as inflation is running around a 40-year high.
Powell expressed following that hike that such 50 basis point moves will come at coming meetings till economic conditions become normal.
Yesterday, Powell repeated his resolve to bring inflation to the Fed’s 2% target and cautioned that it might be painful and could come at the cost of a 3.6% unemployment rate.
Powell hopes that Fed will attain its inflation goals without declining the economy.
Powell added, “You’d still have a strong labor market if unemployment were to move up a few ticks. I would say there are several plausible paths to have a soft as I said softish landing. Our job isn’t to handicap the odds, it’s to try to achieve that. There could be some pain involved in restoring price stability, but the labor market should remain strong, with low unemployment and higher wages.”