the president of Federal Reserve , Jerome Powell said at a press conference on Wednesday (21) that he still cannot say whether the US economy will enter recession, but that it will have a “period of slower growth” due to the current cycle of high interest rates.
Powell, who spoke after the most recent increase of 0.75 percentage point in the rate, he highlighted that the autarchy “cannot fail” to reduce inflation, which remains at the highest level in 40 years.
“We are strongly committed to reducing inflation,” Powell said, noting that price stability is “our foundation” and that “the economy cannot function without it.”
Even with some signs of an economic slowdown, he considered that the labor market remains “extremely tight”, with high wage growth and robust job creation, indicating that it is still unbalanced.
Citing inflation data still above the target, he said that “there is no basis for complacency”, with the autarchy “highly attentive to inflationary risks”. Even so, Powell stressed that decisions will be taken meeting by meeting, depending on clear evidence that inflation is falling.
“The pace will depend on the data and the economic outlook, but at some point it will be appropriate to slow the rate of increases,” the Fed chairman said.
He assesses that the central bank will need a restrictive monetary policy “for some time”, and that the autarchy is taking “strong and fast steps”. “Let’s keep it that way until the job appears to be complete.”
Powell also pointed out that there is already moderate evidence that the labor market is cooling, and that the tightening rate period is expected to slow the labor market and growth. Despite this, he projects that the unemployment rate may not rise as much as in past periods of recession, as the scenario deviates from historical norms.
He also stated that long-term inflation expectations remain “well anchored”, which would help to control inflation. inflation .
“A soft landing is very challenging. No one knows whether this process will lead to a recession, and how deep it would be, but the chances of a soft landing drop as monetary policy needs to tighten up for longer,” Powell said.
Citing the new projections by Fed officials, he said the median projections indicate a total increase of 1.25 percentage points by the end of 2022, but that there was a “reasonably large” group advocating a smaller total increase of 1 percentage point.
“We’re still figuring out what interest rate we need to get to,” Powell said.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
