The summary of the article is about quantitative tightening in May… Using tools to stabilize prices [AP/Newsis] Fed Chairman Jerome Powell.
[Seoul=Newsis] Reporter Yujabi = Federal Reserve Chairman Jerome Powell said the US economy faces a number of risks, including inflation, but the chances of a recession are still low.
According to foreign media such as the Wall Street Journal and The New York Times, Chairman Powell made this statement at a press conference after the Federal Open Market Committee, which started the day before, on the 16th.
The likelihood of a recession next year is not particularly high, he said, adding that households and businesses are in good financial condition and can absorb rate hikes.
Powell also reiterated that the economy is very strong right now, saying aggregate demand is strong and most forecasters expect it to continue.
He predicted that Russias invasion of Ukraine could hurt the U.S. economy through trade and financial market volatility.
Powell said inflation, which has soared to its highest level in 40 years, poses significant challenges to those who are least able to afford the high costs of necessities.
He emphasized that the Fed is acutely obliged to move toward price stability and will use its tools to do so.
When asked whether a rate hike could potentially lead to higher unemployment, he said the Fed was focused on tackling inflation to achieve price stability.
He said that it is impossible to maximize employment without price stability, and the plan is to restore price stability while maintaining a strong labor market.
He also said the Fed expects inflation to return to 2%, but that it will take longer than originally expected.
In a statement issued after the FOMCs regular meeting on the same day, the Fed announced that it would raise the key interest rate by 0.25 percentage points. It is the first time in more than three years that the Fed has raised interest rates.
Chairman Powell hinted that the balance sheet contraction could begin as early as May. The Feds balance sheet has grown to $9 trillion with quantitative easing.
The Fed said in a post-meeting statement that it would begin reducing its holdings of government bonds, institutional debt and mortgage-backed securities at an upcoming meeting.
Chairman Powell noted at this meeting that the FOMC has made exceptional progress in initiating the process, noting that the last time we did this the framework will look very familiar to those familiar with it, but it will be faster than last time.