Federal Reserve Chairman Jerome PowellOn Monday, the president vowed to take tough action regarding inflation. He said that it jeopardizes any otherwise solid economic recovery.

In prepared remarks for National Association for Business Economics, the leader of the central bank stated that “the labor market is very robust and inflation is far too high”.

This speech is less than a week following the election. the Fed raised interest ratesIn an effort to combat inflation, which is at its highest point in over 40 years, the government has taken measures for the first-ever time in three years.

The Federal Open Market Committee reiterated Wednesday’s position. in its post-meeting statementPowell stated that interest rates would rise until inflation is controlled. He said the increases could be even higher if necessary than the quarter-percentage-point move approved at the meeting.

He said, “We will make the necessary adjustments to restore price stability.” “In particular, if the Federal Funds Rate is increased by over 25 basis points, at any meeting, or other meetings, it will be done so that we can move more aggressively. We will also tighten our stance if necessary beyond the common measures of neutral.

Basis points are equal to 0.011%. Officials from the FOMC indicated that they expect 25 basis points increases at their six remaining meetings in this year. Markets are predicting a 50% chance that the May meeting will see a further increase of 25 basis points.

Inflation is caused by sudden tightening of the policy. as measured by the consumer price index7.9% for 12-months. The Fed still prefers this measure. has prices up 5.2%This puts them well in excess of the central banks 2% goal.

Powell, like he had done before, blamed a lot of the pandemic-specific pressures, in particular increased demand for services over goods. He acknowledged that Fed officials and economists had “widely underestimated the length of those pressures.”

These aggravating factors persist, but the Fed and Congress have provided over $10 trillion in fiscal stimulus and monetary support since the outbreak of the pandemic. Powell reiterated that while he still believes inflation will fall to the Fed’s target, it is now time for historically simple policies to be ended.

Powell said that it is likely that the desired supply-side relief will occur over time, as the world settles into a new normal. However, the timing and extent of this relief remain highly uncertain. He has been named chairman protempore while awaiting Senate confirmation. We will continue to make progress, but not assume any supply-side relief in the near future, while we are setting policy.

Powell also spoke out on the Russian invasion of UkraineThe Fed stated that it was adding to inflation pressures and the supply chain. In normal circumstances, the Fed would not change policy in these types of situations. He said that policymakers must be cautious about the uncertain outcome because it could have a negative impact on their ability to make sound decisions.

In normal times when inflation and employment are within our targets, monetary intervention would only be required to deal with a temporary spike in commodity price shocks. The risk of prolonged periods of high inflation is increasing, and could cause longer-term expectation to rise uncomfortably. That underscores the importance for the Committee’s swift action as I described.

Powell indicated last week, that Powell also believes the FOMC is ready to start running down some of its assets worth nearly $9 trillion. Although he acknowledged that it could begin in May, no decision is made.