Howard Schneider, Ann Saphir

WASHINGTON (Reuters). Despite calling stable prices “the bedrock” of an economy, Federal Reserve Chairman Jerome Powell claimed that although there would be some pain from higher interest rates impacting inflation, it would not cause the market to accelerate.

Powell stated that “we fully understand and comprehend how painful inflation can be.” He spoke to Marketplace radio station, repeating his expectations that the Fed would raise interest rates by half of a percentage point each of its two next policy meetings. Powell also promised that “if the data turns the wrong way” he will do “more.”

“Nothing in the economy works, the economy doesn’t work for anybody without price stability,” Powell said. There were periods during our history that inflation was high. Although the task of bringing inflation down below 2% is not without pain, it will be the hardest thing to do. If we fail to address the problem and inflation becomes ingrained in the economy at high levels. And we all know that feeling. That’s not all. People lose the value of their pay.

America is currently facing the most severe inflation problems since 1970s and 1980s when prices rose at 14.5% per year and Paul Volcker, then Fed chief, used punishing interest rates twice to plunge the economy into depression. The unemployment rate has risen to over 10%.

On Thursday, Powell was unanimously confirmed to serve a fourth-year term at the Fed. He did so on a bipartisan vote of 80-19 in the U.S Senate. Powell has often praised Volcker for his commitment to fighting inflation. However, he also stated that he believed the U.S. central banking could navigate the economy to an “soft landing”, wherein inflation does not fall without significant job loss or downturn.

As a result, interest rates have risen sharply due to the policies of Powell. Although inflation and borrowing costs do not reach Volcker-era levels at this time, President Joe Biden is unable to ignore the dramatic rise in the price of food, gasoline, and other essentials. This has been a highly political issue. In April, consumer prices were 8.3% more than they were a year earlier.

Biden is now in the Fed’s top 2 jobs, and has had two of his other appointees appointed to the bank’s 7-seat Board of Governors. This week, the president stated that he would give them all the power he could to reduce inflation.

After Powell was confirmed by the Senate, Biden stated that “Tackling inflation is my highest domestic priority.” Fed will “bring the skills and knowledge necessary at this crucial time for our economy, and all families in the country.”

Powell opened the news conference by stating that he wants to restore price stability for American families. He used Thursday’s radio interview to reinforce this message.