Jay Powell tries to calm recession fears but warns about inflation

• Jay Powell attempted to allay fears and concerns about an oncoming recession.
• The chairman of the US Federal Reserve warned that inflation could continue to surprise to the upside.
• Inflation numbers have been worse than anticipated over the past few weeks.

Jay Powell attempted to allay fears and concerns about an oncoming recession while cautioning that inflation could continue to surprise to the upside.

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In testimony before the Senate Banking Committee on Wednesday, the chairman of the US Federal Reserve stated that the economy could sustain a much tighter monetary policy while reiterating the central bank’s resolve to eliminate the highest inflation rate in four decades.

Inflation numbers have been worse than anticipated over the past few weeks, heightening concerns about a probable recession.

“The American economy is very strong and well positioned to handle tighter monetary policy,” Powell said in opening remarks highlighting the strength of the US consumer and the employment market, where employment has grown on average by roughly 400,000 a month.

However, he emphasized the impact of uncertainty on the future, going beyond previous statements to acknowledge that attaining a “soft landing” has become more difficult.

“Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” he warned.

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“We therefore will need to be nimble in responding to incoming data and the evolving outlook, and we will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time.”