Investing.com – US Federal Reserve Chairman Jerome Powell began a conversation via the Wall Street Journal, and the Fed Chairman said that inflation is sitting at the top of the Fed’s priority, and Powell expressed his happiness with the market’s reaction to the Fed’s tough steps.
Jerome Powell said that the rate will be raised in the next two meetings and the next by 50 basis points according to the data currently available.
Powell added that under central bank rules and the way they do business, we are working at the fastest pace in decades to control inflation, but we are waiting to see clear, explicit and convincing indications that inflation is going down, and if we don’t, we will have to be more aggressive in our actions.
The interviewer asked Jerome Powell about the mistakes he made last year that led to a state of catastrophic inflation, and Powell said that they had to take decisions to save the economy, and indeed when inflation rose in March of the previous year, it began to decline after him, but the Fed did not appreciate the effects of the supply crisis enough, and considered that it would have been better to have started raising interest rates earlier, but he was forced to do now.
Jerome Powell emphasized that inflation is very high, and that the Fed is using its tools to control it.
And about the time when the Fed will stop raising interest rates and adopting tight monetary policy, Powell said: “We will not stop our policy until we see a clear break in the inflation rates.”
Powell described the US economy as strong and cohesive, as well as the US labor market. Powell said we have to stabilize prices, because that’s the only condition for a healthy economy.
Regarding the Russian-Ukrainian war, Powell said that the war had negatively affected the prices of commodities and stimulated them to rise, and we do not know how long this will last. I suspect that the effects of the Russian invasion will be longer than was thought, and the effects of the shutdowns in China on supply chains, which will make de-inflation a very difficult task.
“We know that the task of coming down and controlling inflation is a difficult challenge,” Powell said.
And Powell talked about a soft landing (a fall in inflation without causing a violent damage to the economy) and said that he hopes to drop inflation without causing any damage, but of course there will be some collateral damage, and this is what we hope will happen and that the situation will not escalate.
Powell said the most powerful way to control inflation is to raise interest rates, markets react to what we’re doing well, and volatility is one of the normal things.
Powell expressed his fear of the risk of the economy facing a shortage in the labor market, represented by the lack of job opportunities offered.
Powell assessed inflation at the moment above 3.6%, and Powell said he could see higher inflationary pressures for some time, but that wouldn’t make us experience higher inflation levels, as the Fed’s tools will control it.
It is now down 0.8% to trade at 103.375 against a basket of foreign currencies, down from a 20-year high when it touched the 105.
While it started declining by 0.24% to record $1819.22 an ounce now.
It continues to decline by more than 2.25% in these moments to trade at 15.8975 pounds / dollars, while it also drops by 1.88% to record 109.75 dollars per barrel, while it records 112.00 dollars per barrel, a decrease of 2%.
It rises by 2%, as well as by 1%, and the index by 1.58%.
It fell below the $30,000 levels again, down 0.48% in the last 24 hours.