Powell: We will continue to raise rates until inflation falls

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U.S. Federal Reserve Chairman Jerome Powell said they will continue to tighten monetary policy until inflation falls, and that they will need to consider acting more aggressively if they do not see clear and convincing evidence that inflation is falling.

Speaking at an event organized by The Wall Street Journal, Powell said they have the tools and determination to reduce inflation, adding, “We need to see inflation fall clearly and convincingly, and we will continue to push until we see that.”

Powell said they should see clear and convincing evidence that inflation pressures are abating and inflation is falling, adding, “If we don’t see that, then we’re going to have to think about acting more aggressively.”

He stated that they would not hesitate to raise interest rates above neutral rates.
Stating that the bank raised interest rates by 50 basis points at its last meeting and that they thought that the ongoing interest rate hikes would be appropriate, Powell said that the idea of raising interest rates by 50 basis points in the next two meetings also found wide support in the Federal Open Market Committee (FOMC).

Powell pointed out that the Fed will not hesitate to raise interest rates to more restrictive levels until inflation falls, saying, “We will go until we feel that we are at a point where we can say, ‘Financial conditions are favorable, we see inflation falling.'”

Fed Chairman Powell stated that even if they had to pass neutral rates, they would not hesitate.

The U.S. economy is well positioned to withstand tighter policies
Pointing out that developments outside the United States, such as the war in Ukraine and the COVID-19 quarantines in China, also cause uncertainty in the economy, Powell said that these could suppress growth downwards and inflation upwards.

Powell said the process of restoring price stability could hurt a bit, adding that the U.S. economy is in a good position to withstand strong and tighter policies.

Noting that they will evaluate financial and economic conditions from meeting to meeting, from data to data, Powell emphasized that they will look at the impact of their actions on the economy.

At its last meeting, the Fed raised its policy rate by 50 basis points to a range of 0.75-1.00 percent, within expectations. He announced that his balance sheet, which reached about $ 9 trillion during the epidemic period, would start to shrink as of June 1.

In the US, the Consumer Price Index (CPI) rose by 0.3 percent monthly and 8.3 percent annually in April, exceeding market expectations.

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