Federal Reserve Chair Jerome Powell on Tuesday pledged that the U.S. central bank would ratchet interest rates as high as needed to kill a surge in inflation that he said threatened the foundation of the economy.
"What we need to see is inflation coming down in a clear and convincing way and we're going to keep pushing until we see that," Powell said at a Wall Street Journal event. "If we don't see that, we will have to consider moving more aggressively" to tighten financial conditions.
"Achieving price stability, restoring price stability, is an unconditional need. Something we have to do because really the economy doesn't work for workers or for businesses or for anybody without price stability. It's the bedrock of the economy really."
Acknowledging the possible "pain" that controlling inflation might cause in terms of slower economic growth or higher unemployment, Powell said there were "pathways" for the pace of price hikes to ease without a full-blown recession.
But if inflation does not fall, Powell said the Fed would not flinch from raising rates until it does.
"If that involves moving past broadly understood levels of 'neutral' we won't hesitate to do that," Powell said, referring to the rate at which economic activity is neither stimulated nor constrained.
"We will go until we feel we are at a place where we can say 'yes, financial conditions are at an appropriate place, we see inflation coming down.'" -- Reuters