Federal Reserve Chairman Jerome Powell said Monday that soaring prices have become an issue for that U.S. economy, and he suggested the central bank might take stricter measures to address growing inflation.
\”The labor marketplace is very strong, and inflation is a lot too high,\” Powell said in prepared remarks for that National Association for Business Economics. The customer Price Index increased 0.8% in February to 7.9% on the year-over-year basis, the highest level in 40 years.
Powell reiterated the remarks he earned after the Federal Open Market Committee's meeting Wednesday, saying rate hikes continues until inflation is in check. He didn't eliminate more aggressive rate hikes than the planned quarter-point move announced following the meeting.
\”We will take the necessary steps to ensure a return to cost stability,\” Powell said in Monday's speech.
\”In particular, when we conclude that it is appropriate to move more aggressively by raising the federal funds rate by a lot more than 25 basis points at a meeting or meetings, we'll do so,\” he explained. \”And when we determine that people have to tighten beyond common measures of neutral and right into a smaller stance, we'll do that too.\”
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In August 2022, Powell dismissed long-term inflation. \”Inflation at these levels is, obviously, a cause for concern,\” he said at the time. \”But that concern is tempered by a few factors that claim that these elevated readings will probably prove temporary.\”
Powell said Monday that forecasters \”widely underestimated\” inflated prices, that they attributed to logistics disruptions and elevated consumer demand appearing out of the pandemic.
\”Why have forecasts been so far off?\” he asked in his speech. \”In my view, an important part of the explanation is that forecasters widely underestimated the severity and persistence of supply-side frictions, which, when coupled with strong demand, especially for durable goods, produced surprisingly high inflation.\”