Federal Reserve Chair Jerome Powell addressed chances of a recession and “restrictive” rate levels following a third consecutive 75-basis-point hike on Wednesday.
Powell pointed out that a period of below-trend growth is very likely. “This is something we need to have,” he said, along with softer labor market conditions.
“No one knows if this process will lead to a recession or how significant that recession will be. That is going to depend on how quickly price pressures come down … and whether we get more labor supply,” Powell added. “The chances of a soft landing are likely to diminish to the extent that policy has to be more restrictive.”
He also noted that failure to restore price stability would translate into even “greater pain later on.”
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