WASHINGTON, June 22 — The US economy remains strong but a series of aggressive rate hikes meant to cool soaring inflation could eventually trigger a recession, Federal Reserve Chair Jerome Powell cautioned today.
Last week, the Fed announced the sharpest interest rate increase in nearly 30 years and promised more action to combat the price surge, with gas and food costs skyrocketing and millions of Americans struggling to make ends meet. “And frankly, the events of the last few months around the world have made it more difficult for us to achieve what we want, which is two per cent inflation and still a strong labor market.”
Policymakers “will need to be nimble” given that the economy “often evolves in unexpected ways,” he said. “I think it’s going to be very challenging. We’ve never said it was going to be easy or straightforward,” Powell said when asked about efforts to stave off recession.In addition to easing the financial strain on less-wealthy American families, the Fed chief said tamping down inflation was “essential... if we are to have a sustained period of strong labor market conditions that benefit all.”
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