“Powell says the Fed will not hesitate to keep raising rates until inflation comes down
Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down, saying Tuesday he will back interest rate increases until prices start falling back toward a healthy level.
“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” the central bank leader told The Wall Street Journal in a livestreamed interview. “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,” he added.
Earlier this month, the Fed raised benchmark borrowing rates by half a percentage point, the second increase of 2022 as inflation runs around a 40-year high.
Powell said following that increase that similar 50 basis point moves were likely to come at ensuing meetings so long as economic conditions remained similar to where they are now.
On Tuesday, he repeated his commitment to getting inflation closer to the Fed’s 2% target, and cautioned that it might not be easy and could come at the expense of a 3,6% unemployment rate that is just above the lowest level since the late 1960s.
“You’d still have a strong labor market if unemployment were to move up a few ticks,” he said. “I would say there are a number of 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.””
“Since the beginning of this year, the markets have known big changes and variations. As a result, inflation rates have increased significantly. In order to regulate this, the Fed raised interest rates by 50 points a few weeks ago. This decision helped with inflation, but it’s still not enough. Jerome Powell is ready to cross the line and keep raising interest rates until the issue of inflation is resolved.”