When Federal Reserve Chair Jerome Powell last appeared before Congress in June 2022, inflation had reached a four-decade high and showed no sign of easing. This week, Powell returns to Capitol Hill for hearings under far different circumstances.
“The disinflation momentum we need is far from certain,” Mary Daly, president of the Federal Reserve Bank of San Francisco, said in a speech Saturday. “It’s clear there is more work to do.”Indeed, except for the housing industry, which has been pummeled by higher borrowing costs, most of the economy has seemed generally resistant to the rate hikes the Fed has engineered. The central bank has raised rates at the fastest pace since the 1980s.
Signs of the economy’s continued resilience have reduced fears of recession. But they have also heightened concerns that inflation will be harder to conquer.that their benchmark rate might have to go higher this year than their previous forecast of roughly 5.1%. Christopher Waller, a member of the Fed’s seven-member Board of Governors, said he believed that if the economy remained as hot as it appeared in January — when a half-million jobs were added — the Fed’s key rate would have to top 5.4%.
Many economists say they think inflation will keep falling to roughly 3.5% or 4% but could plateau at that level. Getting it down to the Fed’s 2% target level could require more pain in the form of widespread job losses.
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