The Fed welcomes a 'soft landing' even if many Americans don't feel like cheering
The IndependentFor free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. In his remarks last month, given at an annual economic symposium in Jackson Hole, Wyoming, Powell underscored how the Fed's sharp rate hikes succeeded much more than most economists had predicted in taming inflation without hammering the economy — a notoriously difficult feat known as a “soft landing.” “Some argued that getting inflation under control would require a recession and a lengthy period of high unemployment,” Powell said. Ultimately, though, he noted, “the 4-1/2 percentage point decline in inflation from its peak two years ago has occurred in a context of low unemployment — a welcome and historically unusual result.” With high inflation now essentially conquered, Powell and other central bank officials are preparing to cut their key interest rate in mid-September for the first time in more than four years. Many of them feel like the basket of goods they buy is now much more expensive.” Two years ago, economists feared that the Fed’s ongoing rate hikes — it ultimately raised its benchmark rate more than 5 percentage points to a 23-year high in the fastest pace in four decades — would hammer the economy and cause millions of job losses. In fact, at Jackson Hole two years ago, Powell himself warned that using high interest rates to defeat the inflation spike “would bring some pain to households and businesses.” Yet now, according to the Fed’s preferred measure, inflation is 2.5%, not far above its 2% target.
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