Powell reflects on inflation policy, Fed may consider more aggressive rate hikes

Fed Chairman Powell recently reflected on the handling of inflation issues. In an interview, he admitted that the Fed could have taken interest rate hikes earlier to control inflation. Powell stated that while he is unsure of the impact that earlier rate hikes would have had, they did their best at the time to make decisions based on the information available.

These remarks reflect Powell's shift in attitude regarding his previous stance on "transitory inflation." As inflation continues to remain high, its impact on various sectors of the economy has become increasingly significant, forcing the Fed to adjust its policy stance.

Powell emphasized that the Fed's top priority is to prevent high inflation from becoming entrenched in the economy. To this end, raising interest rates has become the Fed's primary tool for controlling inflation. However, the Fed faces the challenge of curbing inflation while avoiding an excessive cooling of the economy.

At a recent press conference, Powell stated that he would not consider a 75 basis point rate hike. However, in a subsequent interview, he seemed to leave room for a larger rate increase. Powell pointed out that if the economy performs as expected, a 50 basis point hike at the next two meetings would be appropriate. But he also emphasized that the Fed would adjust its policy flexibly based on changes in economic data.

When directly asked whether a rate hike of 75 basis points is possible, Powell did not give a clear answer. He stated that the committee will continue to adjust policies based on future data and changes in the economic outlook.

These remarks indicate that the Fed has adopted a more cautious and flexible approach in responding to the current inflation challenges. At the same time, it also reflects that policymakers are striving to balance the relationship between controlling inflation and maintaining economic growth.