Powell says Fed will hike further and faster if necessary

FILE- Federal Reserve Chairman Jerome Powell testifies before the Senate Banking Committee hearing, on March 3, 2022 on Capitol Hill in Washington. The Senate Banking Committee approved Powell's nomination to a second four-year term as chair of the Federal Reserve on Wednesday, March 16, 2022, ust hours after the Fed began what will be a difficult effort to combat inflation.

The Fed is under pressure from widespread criticism that it has reacted too slowly to a price spike that has catapulted inflation to four-decade highs. When they met last week, Fed officials forecast that they would raise rates six more times this year and four times in 2023. They also projected that inflation would slow to 2.7% by the end of next year.

Some economists argue that such a painless outcome — what they refer to as a “soft landing” — is unrealistic, given the challenges the economy faces, including the potential for deeper economic disruptions resulting from Russia's invasion of Ukraine. The war has already raised the cost of oil, wheat, nickel and other vital commodities.“I believe that the historical record provides some grounds for optimism," he said “Soft, or at least soft-ish, landings have been relatively common in U.

“This is a labor market that is out of balance,” Powell said, which he acknowledged was good for workers, because it has meant higher pay for many. But those wage gains can also lead companies to raise prices to offset their higher labor costs.Powell’s remarks followed a flurry of comments from officials concerning Fed policy since last week’s meeting, all pointing in a hawkish direction.

Waller argued that while the economic data was “basically screaming at us” to raise rates by a half-point at last week’s meeting, the economic uncertainty created by Russia’s invasion of Ukraine led him to support a smaller increase out of caution.

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