Washington DC: Federal Reserve Chair Jerome Powell sought Wednesday to reassure the public that the Fed will raise interest rates high and fast enough to quell inflation, without tightening credit so much as to throttle the economy and cause a recession.
Testifying to the Senate Banking Committee, Powell faced skeptical questions from members of both parties about the Fed’s ability to tame inflation, which has surged to the top of Americans’ concerns as congressional elections near.
Several Republicans charged that the Powell Fed had moved too slowly to begin raising rates and now must speed up its hikes. Powell acknowledged that a recession is possible as the Fed pushes borrowing costs steadily higher. “It’s certainly a possibility,” he said in response to a question from Sen. John Tester, a Democrat from Montana. “It’s not our intended outcome, but it’s certainly a possibility.”
Powell stressed that the Fed’s primary goal is to reduce inflation but said he still hopes to achieve a “soft landing” — a reduction in inflation and a slowdown in growth without triggering a recession and high unemployment.