(Washington) The fight against inflation, which is at its highest level in 40 years in the United States, risks weighing on economic growth and jobs, the US Federal Reserve (Fed) governor, who is about to be re-elected for a second term, warned on Thursday became the Senate.
Posted at 6:03 p.m
“Getting inflation back to 2%[Fed target]will not be painless,” Jerome Powell said in an interview with Marketplace, public broadcaster NPR’s daily economic program.
But, he said, “the most painful thing would be not to counteract it and anchor inflation at high levels in the economy.”
The Fed chair has so far expressed confidence that the institution will succeed in curbing inflation without slowing down the economy. “We have the tools,” he pounded.
Our goal, of course, is to bring inflation down to 2% without the economy going into recession, or maintaining a relatively strong labor market.
Jerome Powell, President of the US Federal Reserve
But things could get more complicated than first thought: “Whether or not we can pull off a soft landing may actually depend on factors beyond our control.”
“A soft landing simply means bringing inflation down to 2% while maintaining a strong labor market. And it’s pretty hard to achieve at the moment,” he admitted.
The Fed began raising rates to dampen demand, first by a quarter of a point in March and then by half a point on May 4 – the largest hike in more than 20 years.
The key interest rates are now between 0.75 and 1.00%.
And further increases are expected by the end of the year.
“If the economy develops roughly as expected, it would be appropriate to raise another 50 basis points (half a point, editor’s note) at the next two meetings,” he underlined, “if things are going better than expected.” we willing to do less. If it’s worse than expected, we’re ready to do more.”
Inflation rose to 6.6% over a year in March, the highest level since 1982, according to the PCE index favored by the US Federal Reserve.
Data for April from another index, the CPI, on which bonds are notably indexed, was released on Wednesday and showed a very slight slowdown to 8.3% over the year from 8.5% in March.