Powell says no guarantee of US economy soft landing

Fed Chair Jerome Powell said on Wednesday there was no guarantee the central bank could bring about a soft landing for the US economy.

“We believe there are ways to achieve the path back to 2% inflation while maintaining a strong labor market. We believe we can do it,” Powell said during a panel discussion with other senior central bank governors at a European Central Bank policy conference in Sintra, Portugal.

Powell was quick to add that “there’s no guarantee we can do that.”

“Obviously that’s going to be quite a challenge,” he added, made even more difficult by “the events of the last few months” such as the war in Ukraine.

Despite the slowdown in economic growth over the first three months of the year, Powell expressed optimism about the current state of the economy.

Households and businesses are in very good shape and the labor market is “tremendously strong,” he said.

In fact, the Fed is planning for slower growth — “moderate growth,” as he put it — a necessary adjustment to allow supply to catch up with strong demand.

“Is there a risk that we’re going too far? Certainly there is a risk,” he said. “But I wouldn’t agree that this is the biggest risk to the economy.”

The “biggest mistake” would be not to restore 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 get rates “into restrictive territory pretty quickly,” he said.

shares DJIA,
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SPX,
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downstairs open on wednesday. The yield of the 10-year Treasury note TMUBMUSD10Y,
3.139%
slipped to 3.17%.

https://www.marketwatch.com/story/powell-says-no-guarantee-of-soft-landing-11656510760?rss=1&siteid=rss Powell says no guarantee of US economy soft landing

Brian Lowry

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