(Washington) The fight against inflation, which is in the United States at its highest for 40 years, risks weighing on economic growth and employment, warned Thursday the president of the American central bank (Fed), all just confirmed for a second term by the Senate.

“Bringing inflation down to 2% (Fed target, editor’s note) won’t be painless,” Jerome Powell said in an interview with Marketplace, NPR’s public radio daily business show.

But, he said, “the most painful thing would be to fail to counter it and for inflation to remain entrenched in the economy at high levels.”

The head of the Fed had so far said he was confident that the institution would manage to slow inflation without slowing down the economy. “We have the tools,” he hammered.

But things could turn out to be more complicated than initially anticipated: “Whether we can execute a soft landing or not may actually depend on factors beyond our control.”

“A soft landing simply means bringing inflation down to 2% while maintaining a strong labor market. And that’s quite difficult to achieve right now,” he acknowledged.

The Fed began raising rates to dampen demand, first by a quarter of a percentage point in March, then by half a point on May 4—the biggest hike in more than 20 years.

Policy rates are now between 0.75 and 1.00%.

And further increases are to be expected until the end of the year.

“If the economy evolves roughly as expected, it would be appropriate for there to be additional 50 basis point hikes in the next two meetings,” he said, stating that “if things go better than expected, we are prepared to do less. If it’s worse than expected, we’re ready to do more.”

Inflation rose in March to 6.6% year on year, its highest level since 1982, according to the PCE index, favored by the American Central Bank.

Data for April of another index, the CPI, on which pensions are indexed, was published on Wednesday, and showed a very slight slowdown, to 8.3% over one year, against 8.5% in March .

https://www.lapresse.ca/affaires/economie/2022-05-12/etats-unis/le-controle-de-l-inflation-aura-des-impacts-previent-le-president-de-la-fed.php

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