Home > Powell says Fed will take ‘necessary steps’ to tackle inflation

Powell says Fed will take ‘necessary steps’ to tackle inflation

Fed Chair Jerome Powell said on Monday that US ‘inflation is much too high,’ his comments coming a few days after the central bank raised interest rates for the first time since 2018.

In his remarks, Powell noted that US inflation was “much too high.” However, so as help address the situation, the Fed would be looking at being as aggressive as possible, he said.

It’s a tone the Federal Open Market Committee (FOMC) adopted after last week’s March meeting where the Fed agreed to have six more rate hikes in 2022 amid 40-year high inflation in year-over-year dating back to 1982.

‘We will take the necessary steps’

Powell said that while the US labour market points to a strong recovery, inflation was likely to dampen this outlook. According to the Fed Chair, the central bank is prepared to take all necessary steps to address this.

 “We will take the necessary steps to ensure a return to price stability,” he said.

He added that the need to get more aggressive on the rates would determine if they go above the 25 basis points seen last week. The same approach would apply to the Fed’s tightening, he explained.

If we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”

'Nothing' stops a 50-basis point rate hike

Inflationary pressures attributable to the pandemic as well as the current geopolitical uncertainty around the Russia-Ukraine war have hampered supply-side recovery. The Fed is thus looking at inflation from both the perspective of supply-side relief and events around Russia’s invasion of Ukraine.

An extended period of high inflation,” he noted, could push FOMC to act expeditiously. It’s a scenario that could see the Fed opt for a 50 basis point rate hike as soon as May, Powell said. 

However, the decision to go that route has yet to be taken, a sentiment noted by CNBC finance editor Jeff Cox.

US markets moved lower in the aftermath of Powell’s remarks. The S&P 500 shed intraday gains to end 0.04% in the red, while the Dow Jones Industrial Average and the Nasdaq Composite closed -0.58% and -0.40% respectively.

Fed, USA
Trade/invest in stocks with just $10
Deposit with ACA, Wire, Pay with my bank
Invest for dividends and get payout on stocks on Ex-Dividend day
Open my Account
We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.