US launches anti-inflation interest rate rises

THE US Federal Reserve kicked off a tightening campaign that’s set to be the most aggressive in decades, as Chair Jerome Powell assured Americans that the economy won’t tip into recession.

After raising interest rates by a quarter point and signalling six more increases this year, Powell told reporters that inflation is too high, the labour market is over-heated and price stability is a “pre-condition” for the US central bank as it tackles the hottest price pressures in 40 years.

“As I looked around the table at today’s meeting, I saw a committee that’s acutely aware of the need to return the economy to price stability and determined to use our tools to do exactly that,” Powell told reporters Wednesday following a twoday meeting of the Federal Open Market Committee.

“The American economy is very strong and well positioned to handle tighter monetary policy.”

“As I looked around the table at today’s meeting, I saw a committee that’s acutely aware of the need to return the economy to price stability and determined to use our tools to do exactly that,” Powell told reporters Wednesday following a twoday meeting of the Federal Open Market

Committee.

“The American economy is very strong and well positioned to handle tighter monetary policy.”

Notwithstanding the projected rate increases, the Fed’s forecasts show very little increase in unemployment, which stays around 3.5% for the next three years.

“The history of being able to guide inflation down from 40-year highs with maximum employment suggests a smooth landing is very difficult to achieve,” said Matthew Luzzetti, chief US economist at Deutsche Bank Securities Inc. — Bloomberg