An economic soft landing is not a baseline expectation for the Federal Reserve as it keeps interest rates high, according to remarks made during a Federal Open Market Committee (FOMC) press conference on Wednesday.
Jerome Powell, chair of the Fed, said that a soft landing, a slowdown in market growth that avoids a recession, was not a baseline goal for the Fed in its fight against high inflation, according to an FOMC press conference. The press conference follows the decision by the Fed to keep the federal funds rate in a range of 5.25% and 5.50%, a 22-year high, after raising rates 11 times since March 2022. (RELATED: Gov’t Jobs Are Booming In Biden’s Economy, Data Shows)
“Would you call the soft landing a baseline expectation?” Howard Schneider, a reporter with Reuters, asked at the FOMC meeting.
“No, no, I would not do that,” Powell responded at the press conference. “I’ve always thought the soft landing was a plausible outcome, that there was a path to a soft landing, and I’ve thought that and I’ve said that since we lifted off. It’s also possible that the path has narrowed and its widened, apparently. Ultimately, this may be decided by factors that are outside of our control at the end of the day.”
Chair Jerome Powell says a soft landing is still possible but stresses that the Fed has to approach with caution https://t.co/IiXehjhIg4 pic.twitter.com/VPFITULspI
— Bloomberg (@business) September 20, 2023
The Fed still remains far away from its 2% target for inflation, with August seeing the rate rise to 3.7% for the year compared to 3.2% year-over-year in July. Inflation peaked in June 2022 at 9.1%, encouraging the series of hikes.
“I do think it’s possible,” Powell said about the possibility of a soft landing. “I also think this is why we are in a position to move carefully again. We will restore price stability. We know that we have to do that, and we know that the public depends on us doing that. And we know that we have to do that so we can achieve the type of labor market that we all want to achieve, which is a sustained period of strong labor market conditions that benefit all.”
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