Fed Chairman does not guarantee the US economy “soft landing”

On May 12, the US Senate officially approved the proposal to re-appoint Mr. Jerome Powell as Chairman U.S. Federal Reserve (Fed) within the next 4 years.

However, from the very beginning of the new term, inflationary will still be a huge challenge for him and the agency, as Mr. Powell said in an interview with Marketplace.

The Fed chairman acknowledged that raising interest rates will have negative effects on the economy. According to Mr. Powell, the Fed is not sure that the US economy will have a “soft landing” – bringing inflation back to the target threshold while maintaining economic growth and jobs.

However, curbing inflation will still be a key priority and the agency will act aggressively to maintain stable prices. A positive signal for the Fed is that the inflation data in April, although continuing to hit a record level of 8.3%, has shown signs of peaking and may gradually decrease in the coming months.

Mr. Jerome Powell. Photo: Reuters

Last week, the Fed raised the benchmark interest rate by 0.5% after a 0.25% increase in March. Markets expect the Federal Open Market Committee to raise another 0.5% at its meeting in October. 6 and continue to raise the benchmark interest rate until the end of the year.

For his part, Mr. Powell said he understood the pain caused by inflation but said the Fed needed to act decisively. “Our goal, of course, is to get inflation back to 2% without letting the economy fall into recession and helping the labor market do well,” he said.

Mr. Powell has previously drawn criticism for the Fed’s delay in raising interest rates and halting its bond-buying program even as inflation soars. In addition, in his press conference last week, he emphasized that he would stop taking more drastic steps such as not considering raising interest rates at 0.75%.

Speaking in an interview with MarketPlace, he said he wasn’t sure what the agency had done would make a difference, but “we did the best we could.”

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