U.S. Federal Reserve Chair Jerome Powell gave his most explicit acknowledgment to date that steep interest-rate hikes could tip the U.S. economy into recession, saying one is possible and calling a soft landing ¡°very challenging.¡±
¡°The other risk, though, is that we would not manage to restore price stability and that we would allow this high inflation to get entrenched in the economy,¡± Powell told lawmakers on Wednesday. ¡°We can¡¯t fail on that task. We have to get back to 2% inflation.¡±
The Fed chair was testifying before the Senate Banking Committee during the first of two days of congressional hearings. In his opening remarks, Powell said that officials ¡°anticipate that ongoing rate increases will be appropriate,¡± to cool the hottest price pressures in 40 years.
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