All eyes were on Fed Chair Jerome Powell who spoke at the European Central Bank’s annual economic policy conference in Portugal on Wednesday. Powell made it very clear that stopping inflation was the Fed’s number one concern even if it means taking on more risk… (Wall Street Journal)
- “Is there a risk we would go too far? Certainly there’s a risk,” Mr. Powell said Wednesday. “The bigger mistake to make—let’s put it that way—would be to fail to restore price stability.”
Powell also made it clear that the desired “soft landing” was not guaranteed…(MarketWatch)
- “We think that there are pathways for us to achieve the path back to 2% inflation while still retaining a strong labor market. We believe we can do that,” Powell quickly added that “there’s no guarantee that we can do that.”
Christine Lagarde, head of the European central bank, said she did not believe that returning to a low inflationary environment, that much of the world benefited from for the last few decades, was possible. However, Powell seemed to believe that it was not too late to return to a somewhat similar economy…
- “There’s a clock running here…The risk is that because of the multiplicity of shocks, you start to transition into a higher-inflation regime. Our job is literally to prevent that from happening, and we will prevent that from happening.”