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Jay Powell said: “Whether we can execute a soft landing or not, it may actually depend on factors beyond our control.” © Win McNamee/Getty

Bringing inflation back to the Federal Reserve’s 2% target will cause “a bit of pain,” Chairman Jay Powell has warned.

The message from the head of the US central bank comes amid significant uncertainty about the economic outlook as the Fed begins what will likely be the most rapid monetary policy tightening in years.

The central bank has already hiked rates by 0.75 percentage points from near-zero levels that had been in place since the early days of the coronavirus pandemic, after implementing a half-year rate hike. point last week. It will also begin to reduce its balance sheet by $9 billion next month.

At least two more half-point rate hikes are expected in June and July, and the Fed is expected to maintain that pace at its September meeting. By the end of the year, traders expect the benchmark policy rate to reach around 2.7%.

In an interview with MarketPlace on Thursday, Powell reiterated the Fed’s commitment to bringing inflation down and stressed how difficult it will be to do so without job losses or a recession.

“Whether we can execute a soft landing or not, it may actually depend on factors that we don’t control,” Powell added. “But we should control the controllable. . . there is work to be done on request.

Powell also sought to clarify the Fed’s willingness to raise rates by 0.75 percentage points at some point, after he said last week at a press conference that the central bank was “not considering actively” that.

“If things go better than expected, we are ready to do less,” he said. “If they are worse than expected, we are ready to do more.”

Powell’s comments were released just hours after the US Senate voted overwhelmingly to confirm him for a second term as president.

Read more about Powell’s outlook here.

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