Powell: US monetary policy will tighten, but we are not trying to trigger recession

The chairman of the Federal Reserve (Fed, the US Central Bank), Jerome Powell, said that the US monetary policy will have to be restrictive amidst the scenario of high inflation, but that the Federal Open Market Committee (FOMC, in acronym in English) is not trying to trigger a recession in the world’s largest economy.

“We are not trying to induce a recession. Now, we are trying to achieve 2% inflation, compatible with a strong labor market. That’s what we’re trying to do,” Powell replied at a press conference on Wednesday, the 15th.

According to him, the paths to bring inflation to the level of 2% become “much more challenging” due to factors that are not under the control of the Committee, referring to the impacts of the war in Ukraine. Powell also said that fluctuations in commodity prices could prevent a soft landing in the US economy.

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The Fed chairman said that the Committee is not seeing a spiraling rise in wages and that you cannot have a strong labor market without price stability. “An unemployment rate of 4.1% with inflation on the way to 2%. I think it would be perfect. I think it would be a successful outcome,” he said, adding that the Fed’s goal is to “influence headline inflation,” but that policymakers “continue to monitor the core,” which excludes volatile energy and food prices.

For him, the US economy is “very strong” and “well positioned” to face the monetary tightening. Powell admitted that there has been a slowdown in the performance of US Gross Domestic Product (GDP), but said there is still a pace of “healthy growth”. “There are changes in the consumption pattern, but spending is still very strong. The environment has become more difficult in the last 4.5 months. We want to see demand moderation and a balance of supply and demand in employment,” he said.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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