Fed’s Powell says job strength shows inflation fight may last ‘quite a bit of time’
Friday’s blockbuster jobs report showed why the battle against inflation will “take quite a bit of time,” Federal Reserve Chair Jerome Powell said on Tuesday, acknowledging that interest rates may need to move higher than expected if that sort of economic strength threatens the Fed’s progress in lowering inflation.
In a question-and-answer session before the Economic Club of Washington, Powell declined several times to say explicitly that the surprising addition of 517,000 new jobs in January would necessarily force the Fed’s benchmark interest rate higher than the 5% to 5.25% range currently anticipated, a level implying quarter-percentage-point increases at the Fed’s next two meetings then a pause.
But it was another data surprise in an era that has been full of them, and the Fed chief said policymakers were open to shocks in either direction – ready to approve even tighter monetary policy if continued strong job gains lead to higher wages and prices, but also open to the idea that inflation may continue to cool despite ongoing job gains.
“We didn’t expect it to be this strong,” Powell said, but it “shows why we think this will be a process that takes quite a bit of time.”
This report’s information was first seen on REUTERS; to read more, click this link.
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