ANKARA
The Federal Reserve Chair Jerome Powell said Wednesday that reducing the record-high inflation in the US will require a below-trend growth in the American economy for some time.
“Reducing inflation is likely to require a sustained period of below-trend (economic) growth, and it will very likely be some softening of labor market conditions,” Powell told a news conference after the conclusion of its two-day meeting.
The Fed, in its much-anticipated meeting, raised its benchmark interest rate by 75 basis points for the third consecutive time to fight record inflation, carrying the target range for the federal funds rate to the 3.00%-3.25% range.
“We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%,” Powell said.
He said that price stability serves as the bedrock of the American economy, he said: “Without price stability, the economy does not work for anyone.”
Powell said the Federal Open Market Committee (FOMC) members are “acutely aware” that high inflation imposes significant hardship as it erodes purchasing power.
The chair stressed that the FOMC members will be looking for “compelling evidence” over the coming months that inflation is moving down and returning to 2%, and added that the pace of interest rate increases will depend on incoming macroeconomic data.
Powell, however, again signaled that the Fed could put a break on rate hikes.
“At some point, as the stance of monetary policy tightens further, it will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.”
Powell reiterated that the Fed will continue rate hikes “until the job is done” as he referred to lowering inflation, and echoed his comments during the Jackson Hole symposium held at the end of August.
