Powell says no guarantee of soft landing


Fed Chairman Jerome Powell said Wednesday there was no guarantee the central bank could design a soft landing for the U.S. economy.

“We believe there are ways to get the road back to 2% inflation while maintaining a strong labor market. We believe we can do that,” Powell said during a roundtable with other top central bank chiefs in a European Central Bank policy conference in Sintra, Portugal.

Powell quickly added that “there’s no guarantee we can do it.”

“It’s obviously something that will be quite challenging,” he added, only making it difficult for “the events of recent months” such as the Ukrainian war.

Despite the contraction in economic growth during the first three months of the year, Powell was optimistic about the current health of the economy.

Homes and businesses were in a very strong shape and the job market is “tremendously strong,” he said.

In fact, the Fed is designing slower growth, “moderate growth,” he said, a necessary adjustment to allow supply to catch up with strong demand.

“Is there a risk that we may go too far? There is certainly a risk, “he said.” But I would not agree that it is the biggest risk to the economy. ”

The “big mistake” would be not restoring price stability, ”he said.

The Fed “will not allow a transition from a low-inflation environment to a high-inflation environment,” Powell said.

The Fed needs to introduce its benchmark benchmark rate “in restrictive territory fairly quickly,” he said.

DJIA shares,
+ 0.46%

SPX,
+ 0.06%
opened lower Wednesday. The performance of the 10-year Treasury note TMUBMUSD10Y,
3,164%
it dropped to 3.17%.



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