Federal Reserve Chairman Jerome Powell said Thursday that the central bank's commitment to cool inflation is "unconditional." Unemploy more Americans.
Powell testified at Capitol Hillfor two consecutive daysand grilled by members of the House Financial Services Commission seeking answers to the central bank's efforts to combat high inflation over decades. Faced with. While trying to avoid the recession.
"We have an unsustainably hot labor market, far from our inflation target," Powell said.
"We really need to restore price stability and bring inflation back to 2%. Without it, maintaining maximum employment duration, where benefits are very widespread. And where people's wages aren't eaten up by inflation, "Powell added.
The Fed is scrambling to deal with inflation, which reached 8.6% in May. This is well above what economic policy makers consider to be acceptable. But the move by the central bank to raise interest ratesthree-quarters percentage pointsearlier this month exacerbated concerns that policy tightening could put the economy in recession.
Powell said in a Senate committee testimony a day ago that the Fed is trying to avoid a recession, which is "certainly possible. There is, "he said, admitting the risk. The Fed is expected to rise by at least half a percentage point in July, and if inflation continues, it is expected to rise similarly in the coming months.
The rate hikes so far haven't had a significant impact on the employment market, with the national unemployment rate remaining at just 3.6% until May. However, Powell acknowledged that the Fed's further actions could lead to more unemployment as companies seek to cut costs.
"We don't have precise tools," Powell said. "So there is a risk that the unemployment rate will rise from historically low levels. The labor market with an unemployment rate of 4.1% or 4.3% is still a very strong labor market."
Powell also acknowledged the FRB's efforts to bring inflation back to 2%, a strong labor market (investors). It has become "significantly difficult" in recent months while maintaining the so-called "soft landing" that is required.
He quoted the effects of Russia's invasion of Ukraine. This contributes to rising gas and food prices and supply chain disruptions.
