AGL 40.02 Increased By ▲ 0.02 (0.05%)
AIRLINK 127.30 Increased By ▲ 0.26 (0.2%)
BOP 6.62 Decreased By ▼ -0.05 (-0.75%)
CNERGY 4.48 Decreased By ▼ -0.03 (-0.67%)
DCL 8.60 Increased By ▲ 0.05 (0.58%)
DFML 41.65 Increased By ▲ 0.21 (0.51%)
DGKC 87.45 Increased By ▲ 0.60 (0.69%)
FCCL 32.55 Increased By ▲ 0.27 (0.84%)
FFBL 64.99 Increased By ▲ 0.19 (0.29%)
FFL 10.25 No Change ▼ 0.00 (0%)
HUBC 109.51 Decreased By ▼ -0.06 (-0.05%)
HUMNL 14.70 Increased By ▲ 0.02 (0.14%)
KEL 5.06 Increased By ▲ 0.01 (0.2%)
KOSM 7.63 Increased By ▲ 0.17 (2.28%)
MLCF 41.58 Increased By ▲ 0.20 (0.48%)
NBP 59.70 Decreased By ▼ -0.71 (-1.18%)
OGDC 192.84 Increased By ▲ 2.74 (1.44%)
PAEL 28.28 Increased By ▲ 0.45 (1.62%)
PIBTL 7.76 Decreased By ▼ -0.07 (-0.89%)
PPL 151.30 Increased By ▲ 1.24 (0.83%)
PRL 26.10 Decreased By ▼ -0.78 (-2.9%)
PTC 16.12 Increased By ▲ 0.05 (0.31%)
SEARL 83.25 Decreased By ▼ -2.75 (-3.2%)
TELE 7.80 Increased By ▲ 0.09 (1.17%)
TOMCL 35.40 Decreased By ▼ -0.01 (-0.03%)
TPLP 8.09 Decreased By ▼ -0.03 (-0.37%)
TREET 16.10 Decreased By ▼ -0.31 (-1.89%)
TRG 53.22 Decreased By ▼ -0.07 (-0.13%)
UNITY 26.37 Increased By ▲ 0.21 (0.8%)
WTL 1.26 No Change ▼ 0.00 (0%)
BR100 9,967 Increased By 83.6 (0.85%)
BR30 31,001 Increased By 400.7 (1.31%)
KSE100 94,120 Increased By 764.5 (0.82%)
KSE30 29,163 Increased By 232.1 (0.8%)

WASHINGTON: The US economy remains strong but a series of aggressive rate hikes meant to cool soaring inflation could eventually trigger a recession, Federal Reserve Chair Jerome Powell cautioned Wednesday.

Powell, whose testimony before senators was closely watched by investors and analysts, also said the world’s largest economy faces an “uncertain” global environment and could see further inflation “surprises.”

The Fed chair again stressed that policymakers understand the hardships caused by rising prices and are committed to bringing down inflation, which has reached a 40-year high.

Last week, the US central bank announced the sharpest interest rate increase in nearly 30 years and promised additional similar moves to combat the price surge, with gas and food costs skyrocketing and millions of Americans struggling to get by.

But when peppered with questions about the prospect of a recession, Powell acknowledged the risk.

“It’s not our intended outcome at all, but it’s certainly a possibility,” he told the Senate Banking Committee.

“And frankly, the events of the last few months around the world have made it more difficult for us to achieve what we want, which is two percent inflation and still a strong labor market.”

In his opening remarks, Powell insisted the US economy “is very strong and well positioned to handle tighter monetary policy.” “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” the Fed chief said in his semi-annual appearance before Congress.

Policymakers “will need to be nimble” given that the economy “often evolves in unexpected ways,” he said.

The Fed is facing intense criticism that it was too slow to react to the changing economy, which benefited from a flood of federal government stimulus.

Last week’s super-sized 0.75-percentage-point increase in the benchmark lending rate was the third since March, taking the policy rate up a total of 1.5 points. Powell at the time said a similar increase was likely in July.

The ideal scenario would be for those moves to cool the economy enough to douse inflation pressures, without choking off growth — the hoped-for “soft landing.”

“I think it’s going to be very challenging,” Powell said, insisting there are “pathways” to avoid recession, and that he does not view the risk of a downturn as “particularly elevated.”

Comments

Comments are closed.