With the U.S. economy experiencing a period of high inflation and with new economic uncertainties prompted by the Russian invasion of Ukraine, Federal Reserve Chairman Jerome Powell today warned that these conditions could push the Federal Open Market Committee’s longer-term expectations “uncomfortably higher,” underscoring a need for the FOMC “to move expeditiously” to raise interest rates.
“Price stability is essential if we are going to have another sustained period of strong labor market conditions,” Powell said. “If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well. He added, however, that “today the economy is very strong and is well positioned to handle tighter monetary policy.”
