Amid the 40-year high inflation experienced by the Americans, Jerome Powell, Federal Reserve Chairman, provided an ambiguous statement regarding the soft landing of the economy in the coming year. About the statements made by Yellen regarding "the soft landing" of the economy, Powell exhibited his concern that controlling the current hovering inflation seems to be an uphill task and will beget some economic pain. Still, it is one of the top priorities to deal with.
Powell said he couldn't promise a so-called soft landing for the economy as the Fed raises interest rates to tamp down price increases running near their fastest pace in more than 40 years.
Highlighting the hovering inflation, Powell claimed that abating the rampant inflation is a challenging task and would be difficult to accomplish for a couple of reasons.
He cited one of the reasons that the tight labor market, which demands high wages, evades a recession that follows aggressive tightening policies. He added, "It won't be easy, and no one here thinks it will be easy."
These remarks and statements were published on the same day when Powell was elected for the second term. Getting elected for the second term, Powell highlighted his priorities to deal with in his second tenure. On the top of his priority list was combating inflation which ran at an 8.3% annual rate, a 40-year high stat.
Witnessing the current inflation, the Federal Reserve gave its consent to an increase in half a percentage point in the interest rate, followed by a quarter-point hike in March.
The Fed last week approved a half percentage point interest rate increase that followed a quarter-point hike in March. It was expected by the market to hike another half point in June and further to keep increasing the rate till the end of the year.