Federal Reserve Chairman Jerome H. Powell said it is unclear whether global pressures will continue to slowly stabilize inflation over the years before the pandemic recurs. He emphasized that it is important for the central bank to stabilize prices. A new and more confused world.
“We have lived in an era of disinflationary forces around the world,” Powell said in a panel with the leaders of the European Central Bank and the Bank of England on Wednesday. “Since the pandemic, we live in a world where the economy is driven by very different forces, and we know — what we don’t know is that we go back to something more similar. Whether or not. It’s a bit like what I had before. “
“I think it’s a kind of blend,” he added.
The chairman of the Federal Reserve Board said the central bank’s job is to find price stability and maximum employment in new economic conditions.
Inflation is high in many developed countries, supported by rapidly rising gas prices, high food costs, and supply chain problems that began early in the pandemic and have been cascaded since then. Part of the inflation that the United States is experiencing is driven by the strong underlying domestic demand. Apartment rents have skyrocketed, hotel room rates have risen significantly, and various services have become more expensive. However, these shared global issues have also caused most of the recent price increases.
With inflation at the fastest pace in 40 years in the United States, federal policymakers are trying to regain restraint by soaring interest rates. Three-quarters of June points.Central bank says it wants to raise interest rates Well over 3 percentCompared to the present Range from 1.5 to 1.75 percentBy the end of the year.
“The purpose is to slow growth so that supply has the opportunity to catch up,” Powell said Wednesday. “It’s a necessary adjustment that needs to happen.”
“Currently, supply and demand are out of balance in many parts of the US economy,” including the labor market, said the chairman of the Federal Reserve Board.
The unemployment rate dropped sharply from the double-digit level in 2020 to 3.6%, approaching the lowest level in half a century. Currently, every applicant in the United States has nearly two jobs. Given its underlying strength, the Federal Reserve has hoped that it could slow the economy and cool demand without putting it in a painful recession.
However, central banks, including Powell, emphasize that achieving that optimistic result is becoming more difficult.
“We don’t have precise tools,” Powell admitted Wednesday. “The events of the past few months have made it very difficult, especially given the war in Ukraine.” ..
“It’s getting harder and narrower,” Powell said of the so-called soft landing. “Still, that is our goal.”
