- Jerome Powell acknowledged that he cannot guarantee a “soft landing” while trying to rein in the highest inflation in four decades.
- Although it remains his main objective, to lower inflation, Powell does not rule out that this fight could cause problems in the economy. Many experts have highlighted the possibility of a recession in the medium term.
- Year-on-year inflation fell by just 0.2% from March to April, from 8.5% to 8.3%. This could indicate that the peak of inflation was probably seen in March.
- It should be remembered that the first measure taken by the Fed is to raise the interest rate by 50 basis points, while the market expects the same increase to be repeated in June.
- “Our goal, of course, is to get inflation back down to 2% without the economy going into recession,” Powell reflected.
The president of the Federal Reserve, Jerome Powell, admitted that it will not be easy to control inflation (it is at a maximum of four decades) and that in the fight to lower it, he did not rule out that it could cause economic problems.
Similarly, he clarified that slowing down inflation continues to be his main priority. That is why the Fed raised interest rates by 50 basis points, to curb price increases.
“So a soft landing is really going back to 2% inflation while keeping the labor market strong. And it’s pretty challenging to pull that off right now, for a couple of reasons.”
Powell.
The president also referred to the tight labor market that currently exists and that makes wages rise and, consequently, it is a greater challenge to avoid a recession, the great fear of investors and Wall Street. “It will be a challenge, it will not be easy. No one here thinks it will be easy. However, we believe that there are paths for us to get there”, he highlighted in an interview.
Inflation in April fell only 0.2% compared to March, going from a maximum of 8.5% to 8.3%. As a result of this, analysts expect the Federal Open Market Committee to raise the interest rate another 50 basis points in June, and to continue doing so until the end of the year.
