Federal Reserve Chairman Jerome Powell warned on Tuesday that the United States may experience “some pain” as the central bank raises interest rates to combat inflation, stressing that the Fed will do whatever it takes to limit price growth.

Powell stated during a live interview at The Wall Street Journal’s “Future of Everything” event that the Fed will continue to raise interest rates until inflation begins to decline and the forces driving up prices recede, even if it means risking a worse economic recession.

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Powell expressed optimism that the US economy could withstand rising interest rates without entering a recession. With two open positions for every unemployed person and a jobless rate around 50-year lows, the U.S. economy has plenty of room to absorb a drop in activity caused by higher interest rates, he added.

But Powell made it clear that the Fed would not relent in its fight against inflation until it was back on track to meet the bank’s 2% annual target, even if it required hiking interest rates to levels that would restrain the economy.

“Restoring price stability is an unconditional need — it’s something we have to do,” Powell stated.

“The economy doesn’t work for workers, or for businesses, or for anybody without price stability,” he added. “It’s the bedrock of the economy, and it’s something we need to do if we want to have the labor market we all want to have.”

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Powell’s warning is the Fed chairman’s latest attempt to reassure financial markets and businesses that the central bank will not allow inflation to soar after more than a year of rapidly rising prices.

Annual inflation, as assessed by the Fed’s favoured indicator, the personal consumption expenditures price index, reached 6.6 percent in March, more than three times the bank’s yearly target. Another crucial inflation indicator, the Labor Department’s consumer price index, climbed 8.3 percent over the last year, down slightly from an annual increase of 8.5 percent in March.

The Fed began raising its benchmark interest rate range in March, nearly two years after it lowered rates to near-zero levels and began purchasing hundreds of billions of dollars of bonds each month to stimulate the US economy.

The bank has already raised rates by 0.75 percentage points, and another increase of at least 1 percentage point is predicted by the end of the summer.

The Fed was under pressure to start raising rates considerably sooner last year as inflation grew significantly, owing in part to severe supply chain disruptions and recruiting difficulties caused by the outbreak. However, Powell and the Fed, along with a slew of experts, predicted that inflation would fall as pandemic-driven forces faded further into the year.

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Powell stated that the Fed’s perspective of the economy “changed pretty thoroughly” in October after economic data revealed that inflation was accelerating, labour demand was increasing, and job growth was far greater than previously reported.

“It probably would have been better to have raised rates earlier. We were looking at some weak, weak employment reports. We were looking at inflation reports that were coming down,” Powell said, adding, “When that stopped and when the data started pointing toward a sort of stronger economy with higher inflationary pressures [and] higher wage pressures, we didn’t hesitate from that point.”

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A rising number of analysts and former Fed officials believe the bank waited too long to begin raising interest rates without triggering a recession.

COVID-19 lockdowns across China, severe supply chain shortages, port backlogs, and the economic consequences from the Ukraine war are also pushing up inflation and damaging the global economy — a tricky mix that the Fed can do little to correct.

“There could be some pain involved in restoring price stability, but we think we can maintain a strong labor market, defined as a labor market where unemployment is low and wages are moving up,” Powell said.

“It may not be the perfect labor market,” he added, saying that the unemployment rate could climb somewhat from its present level of 3.6 percent. “But it will be a strong labor market.”