Saturday, 21 May 2022
WorldFed Chairman says soft landing in economy could be due to factors...

Fed Chairman says soft landing in economy could be due to factors they can’t control

In an interview on the radio show “Marketplace”, Powell said that inflation is very high and they have the means to control it.

Pointing out that central bank officials of many countries face the same kind of problems, Powell said, “Global economies around the world have been affected by a series of inflationary shocks.” made its assessment.

“We are ready to do more if things go worse than expected”

Powell stated that the process of reducing inflation to 2 percent would be a bit painful, adding that not fighting high inflation and allowing it to settle is more painful.

Explaining that allowing high inflation would mean a much deeper regression, Powell said that he thinks it is a very challenging environment for monetary policy making.

Powell stated that their goal is to bring inflation back to 2 percent without putting the economy into recession and keeping the labor market strong. “I think the only thing we can’t really do is fail to restore price stability,” Jerome Powell said. said.

Reiterating that they think it would be appropriate to increase interest rates by 50 basis points in the next two meetings of the bank, Powell emphasized that they are ready to do less if things go better than expected, and more if things go worse.

“Soft landing will not be easy”

Powell stated that the “soft landing” in the economy is a return to 2 percent inflation while keeping the labor market strong. “It’s going to be hard, it’s not going to be easy. We still think there are ways to get there.” he said.

Underlining that they are determined to use the tools of the bank to return to price stability, Powell noted that they can control demand but cannot affect supply with policies, and that supply is “a big part of the story” here.

Pointing out that there are geopolitical developments around the world that will play a very important role in the economy, Powell said, “Whether we can make a soft landing may depend on factors that we do not actually control.” he said.

“It would probably be better for us to raise rates a little earlier,” said Powell, who also commented on the past. said.

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