Jerome H. Powell, the chairman of the Federal Reserve, will appear before the House Financial Services Committee on Thursday, after testifying in the Senate on Wednesday about the central bank’s efforts to control inflation. Notably, Mr Powell said that if the Fed tried to avoid it, a recession was “certainly a possibility”.
Here are some of Mr. Powell’s other comments from his Wednesday testimony about rising prices, interest rates and the possibility of a severe economic downturn:
Mr Powell said the central bank may be able to bring rapid inflation down without tipping America into a painful downturn. “We are not trying to cause, and do not think we will need to cause, a recession,” he said.
But executing a successful so-called soft landing “has been made much more difficult by the events of the past few months,” Powell continued, citing supply disruptions resulting from shutdowns in China and the war in Ukraine which pushed prices even higher. .
And the Fed’s policies to restrain demand and fight inflation are expected to hurt the economy. Central bankers themselves predict that unemployment will rise and growth will slow as higher interest rates kick in, making mortgages, credit card debt and business loans more expensive. “I think what you’ll see is continued progress, rapid progress toward higher rates,” Powell said.
At the same time, Fed officials say failing to try to calm inflation — allowing it to continue to rise and take root — would be an even bigger problem. “It’s very high inflation, and it’s hurting everyone,” Powell said.
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