Jerome Powell, Chairman of the US Federal Reserve, said in his presentation that there is a risk of rising unemployment.
Powell attended the session of the House of Representatives Financial Committee. Answering questions from committee members, Powell said the commitment to fight inflation is “unconditional.”
Powell pointed out that reducing inflation without affecting the labor market has become much more challenging and said there might be job losses. However, he stated that it is possible to have a strong labor market while keeping inflation under control.
Powell Admitted That They Underestimated Inflation
When asked about the Fed’s misinterpretation of inflation, Powell said that, in retrospect, they underestimated inflation and that it was not temporary. Recalling that every central bank had to make the same decision, Powell said, “This was the decision we had to make. We knew it could be wrong. When it started to look pretty wrong, we changed course.”
Noting that they will try to make good decisions in real-time, Powell said that price stability is the cornerstone of the economy and needs to be restored.
