U.S. Economy is in ‘Strong Shape,’ Fed Chair Jerome Powell Says

Last Updated on June 29, 2022

Federal Reserve Chair Jerome Powell believes the U.S. economy is in “strong shape.” He also stated his belief that the fed can tighten monetary policy without inducing a recession. In addition, Powell confirmed that additional rate hikes are likely in July.

Powell claimed that the central bank can reduce inflation to 2 percent while maintaining a solid labor market. This is becoming increasingly difficult, however, which the fed chair acknowledged.

“We hope that growth will remain positive,” Jerome Powell said of the U.S. economy during a panel discussion oat the European Central Bank’s (ECB) annual policy forum on Wednesday. He further stated that business finances are also in solid shape, and “overall the US economy is well positioned to withstand tighter monetary policy.”

Fed Chair Jerome Powell: “The US economy is actually in pretty strong shape.”

He speaks with Francine Lacqua at the ECB Forum on Central Banking in Sintra, Portugal https://t.co/kHipyaR08W pic.twitter.com/reVngqxSZ5

— Bloomberg (@business) June 29, 2022

The Federal Reserve has maintained a goal of raising interest rates without inducing a recession, Powell went on to say. He previously made a similar statement after the Fed raised interest rates by 75 basis points, the sharpest increase in three decades.

Jerome Powell later confirmed expectations that additional rate hikes are likely on the horizon. Another increase of 50 basis points is on the table when the Fed meets again in July.

The Federal Reserve has been scrambling to tame the highest inflation rates in 40 years. Powell said financial markets’ pricing for Fed rate-hike expectations is “pretty well aligned with where we’re going,” noting that it’s roughly in line with the forecasts that Fed policy makers issued earlier this month, according to The International Business Times.

Powell’s optimism as an increasing number of Americans believe that a recession is inevitable. Another quarter of GDP regression will officially land the U.S. economy in a downturn, as the official definition of a recession requires two consecutive quarters of decline.

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