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Powell Warns of "Likely" Growth Slowdown From Aggressive Rate Hikes

Economy Jun 29, 2022 09:56AM ET
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© Reuters.

By Scott Kanowsky 

Investing.com -- Federal Reserve chair Jerome Powell has warned that a broader economic slowdown could be a "likely" outcome from aggressive monetary policy actions aimed at curbing the soaring prices.

Speaking at a closely watched panel of some of the world's top central bankers, Powell backed the Fed's recent 75 basis point interest rate rise - the largest hike since 1994 - as necessary to help bring inflation back down to its 2% target. He also admitted that the Fed is trying to engineer a controlled downturn in growth to help the U.S. economy deal with recent supply chain disruptions that have partly contributed to rising costs.

"We had expected that this year that growth would moderate to a more sustainable path. We also are, of course, raising interest rates and the aim of that is to slow growth down so that supply will have a chance to catch up," Powell said.

He added that he hopes the economy's output remains positive while supplies recover. But Powell conceded that there's "no guarantee" the Fed can achieve these goals, particularly given the impact of the war in Ukraine on global prices.

Powell's comments come as investors weigh whether a slew of weak recent data around the world - including the gloomiest reading of U.S. consumer confidence in the economic outlook in almost a decade - may lead policymakers to rethink plans to roll out large rate hikes.

Powell Warns of "Likely" Growth Slowdown From Aggressive Rate Hikes
 

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Comments (10)
Jack Waters
Jack Waters Jun 30, 2022 10:35AM ET
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The problem is the uncertainty. You cannot trust the smartest expert or the most educated person do what regular people know must be done. We know what the FED should have done. In the future we do not know what they will do. We know rates should rise but will they stay the course or bow to some external pressure. Then we have the few people that draw untold wealth from turbulent times with shorts, options etc. The market is a Casino. The only thing that matters is where you place your bet. Place enough bets and you can manipulate the odds. Every game is a winner. Maybe we should take our marbles and go home until the dust settles.
Rawling and Mason Meagher
Rawling and Mason Meagher Jun 29, 2022 2:47PM ET
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Likely is as vague as it gets...Likely I will die someday,when? is the answer
Brad Albright
Brad Albright Jun 29, 2022 2:47PM ET
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No, it is certain you will die some day. It is likely you will never get laid.
Ludo Huibers
Ludo Huibers Jun 29, 2022 11:14AM ET
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what a genius
Adamo Nals
Adamo Nals Jun 29, 2022 11:03AM ET
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There is NOTHING that will change the rate hikes. We are already 4-5 years behind. Theres zero choice. So anyone who even entertains the idea of the fed will back off should just leave the market now. We have a long way to go down in the S&P before we hit the bottom. The fed put is dead and buried forever and ever and ever and will never ever come back. You need to get that through all of your minds. NEVER EVER AGAIN. Rememeber that. This will be years of rate hikes and inflation.
John Blackwell
John Blackwell Jun 29, 2022 11:03AM ET
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You're wrong. They will pivot before the end of this year. Another 100 points will crash the markets and the Fed will QE again.
Nils Hullmann
Nils Hullmann Jun 29, 2022 11:03AM ET
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you shouldn't own assets with this lack of knowledge
Jack Waters
Jack Waters Jun 29, 2022 11:03AM ET
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John Blackwell The big problem is MAYBE.
Stefan Kunco
Stefan Kunco Jun 29, 2022 10:55AM ET
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No one can invent so many lies.
Kemal Unalan
Kemal Unalan Jun 29, 2022 10:46AM ET
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Recession on his wayyyy
Nelson Manning
Nelson Manning Jun 29, 2022 10:38AM ET
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f.j.b and f you if you voted for him...
Christopher Arntz
Christopher Arntz Jun 29, 2022 10:27AM ET
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F. J.B. Biden took the best economy and crushed it in no time. democrats are so pathetic.
Count da Money
CountdaMoney Jun 29, 2022 10:24AM ET
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🤡🤡🤡🤡🤡💩💩💩💩💩💩
john smith
john smith Jun 29, 2022 10:18AM ET
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Where's the GDP data? nowhere to be found......
David Tansek
David Tansek Jun 29, 2022 10:18AM ET
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Final reading 1Q22 GDP was (1.6%) vs expecs of (1.5%) against +6.9% for 4Q21 sequentially. First quarter of negative GDP is on the books. One more like it makes a recession official. We'll know for sure Sept.29th. The S&P is hitting resistance at 3854, the (20%) bear market threshold. This was all caused by Brandon and his little war against the American people. Remember that in November.
 
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