Fed Chair Powell: Slower economic growth may be needed to conquer stubbornly high inflation
Federal Reserve Chair Jerome Powell said inflation remains too high and that bringing it down to the Fed’s target level will likely require a slower-growing economy and job market
WASHINGTON — Federal Reserve Chair Jerome Powell said Thursday that inflation remains too high and that bringing it down to the Fed's target level will likely require a slower-growing economy and job market.
Powell noted that inflation has cooled significantly from a year ago. But he cautioned that the economy is growing faster than the Fed had expected and could continue to keep inflation elevated. As a result, the Fed chair said, it's not yet clear whether inflation is on a steady path back to the Fed's 2% target.
“We certainly have a very resilient economy on our hands,” Powell said in a discussion at the Economic Club of New York. “Many forecasts called for the U.S. economy to be in recession this year. Not only has that not happened; growth is now running for this year above its longer-run trend. So that’s been a surprise.”
Powell's comments echoed speeches from other Fed officials this week, which have underscored that they are grappling with an unusual and unexpected development: Inflation is slowing even while economic growth and hiring have been robust.
In its drive to tame inflation, the Fed has raised its key rate 11 times since March 2022 to about 5.4%, its highest level in 22 years. Though inflation has tumbled from its peaks of last year, it still has further to go to reach the Fed's 2% inflation target. Doing so is likely to require slower economic growth.
If the healthy economic expansion and hiring endure, Powell said Thursday, the central bank might have to further raise its benchmark rate. The Fed's long series of rate
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