The head of the Federal Reserve, Jerome Powell, has warned of a higher than anticipated inflation rate and lower economic growth. He spoke at a press conference on Wednesday, where he discussed how the current economic data might necessitate a slower pace of growth.
Powell cited a “significantly higher than expected inflation rate” as a major concern. He also said that the economy is likely to grow at a slower pace in order to bring that rate back down to a manageable level. He added that it is “important to recognize the path ahead is likely to be uncertain and perhaps even bumpy.”
The comments come at a time when many analysts have predicted a possible recession in the United States. Powell said that while “there is not a direct correlation between inflation and economic activity,” it is important to note that the former “can have an impact on growth and jobs.” He said that “policy makers must take action to address inflationary pressures.”
In response, the Federal Reserve has attempted to balance the current surging inflation with the goal of economic growth. Powell emphasized that this should not be done at the expense of being “especially attentive to the risks of the economy, currently and in the coming years.”
Overall, despite Powell’s warning about the possibility of an economic slowdown, the Federal Reserve’s goal remains to bring the inflation rate down to a sustainable level over time. He concluded the press conference by saying that the Federal Reserve will continue to “do what it can to promote maximum employment, strong growth, and price stability.”