Fed chair says lower growth needed to bring inflation down

By Ovunc Kutlu

ISTANBUL (AA) - US Federal Reserve Chair Jerome Powell said Thursday a lower economic growth is needed to bring high inflation down.

"Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal," he said in his remarks at the Economic Club of New York Luncheon held in New York.

"We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters. While the path is likely to be bumpy and take some time."

To fight record inflation that climbed last summer to four-decade high, the bank made 11 rate hikes since March 2021, raising the federal funds rate to 5.25% - 5.5% target range -- the highest level in 22 years.

Analysts say Fed's aggressive monetary tightening cycle could push the American economy in a recession.

"The record suggests that a sustainable return to our 2 percent inflation goal is likely to require a period of below-trend growth and some further softening in labor market conditions," said Powell.

"The stance of policy is restrictive, meaning that tight policy is putting downward pressure on economic activity and inflation. Given the fast pace of the tightening, there may still be meaningful tightening in the pipeline," he added.

Although the bank skipped interest rate increases on two occasions this year, most Fed officials support at least one more rate increase in one of the two remaining meetings this year.