Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

Powell Says U.S. Economy "Very Strong," Can Handle Higher Rates

Published 06/22/2022, 09:37 AM
Updated 06/22/2022, 09:54 AM
© Reuters.

By Geoffrey Smith 

Investing.com -- The U.S. economy is still strong and can handle the planned series of interest rate rises, Federal Reserve Chair Jerome Powell said on Wednesday.

"The American economy is very strong and well positioned to handle tighter monetary policy," Powell said in his opening remarks to the Senate Banking Committee at the start of two days of testimony before Congress on the state of the economy.

Powell also noted that "real gross domestic product growth has picked up this quarter, with consumption spending remaining strong," although he acknowledged that "business investment appears to be slowing" and also said that the housing market is cooling as higher mortgage rates make themselves felt.  

At the same time, Powell stressed the Fed's determination to bring inflation down to its 2% target from the current 40-year high of 8.6%.

"We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so," Powell said. He argued that financial conditions have already tightened significantly since the Fed started withdrawing the stimulus it put in place at the start of the pandemic two years ago.

He added, however, that he couldn't rule out further upside surprises, pointing to the ongoing tightness of energy and other commodity markets due to Russia's invasion of Ukraine 

"Making appropriate monetary policy in this uncertain environment requires a recognition that the economy often evolves in unexpected ways," he said. "Inflation has obviously surprised to the upside over the past year, and further surprises could be in store."

Powell said the Fed will need to be "nimble" in responding to any change in the economic outlook. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.