Federal Reserve Chair Jerome Powell warned Thursday that getting inflation under control could cause some economic pain but remains his top priority.
Powell noted he couldn’t promise on “soft landing” for the economy as the Fed raised interest rates to tame down inflation.
“So a soft landing is, is really just getting back to 2% inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now, for a couple of reasons,” the central bank chief said in an interview with Marketplace.
His remarks included that tightness in the labor market is pushing up wages and avoiding a recession often follows aggressive policy tightening might be a challenge.
“So it will be challenging, it won’t be easy. No one here thinks that it will be easy,” he said. “Nonetheless, we think there are pathways … for us to get there.”
The remarks were published the same day the Senate overwhelmingly confirmed Powell for a second term, a move that came nearly seven months after President Joe Biden first submitted the nomination.
For his part, Powell said he understands the added pain that higher rates may cause, but said the Fed needs to act aggressively.
“Our goal, of course, is to get inflation back down to 2% without having the economy go into recession, or, to put it this way, with the labor market remaining fairly strong,” he said. “That’s what we’re trying to achieve. I think the one thing we really cannot do is to fail to restore price stability, though. Nothing in the economy works, the economy doesn’t work for anybody without price stability.”
