Powell Pledges to Beat Inflation Even If it Causes Recession and Job Losses – Mish Talk

Handling an Economic Slowdown

Powell testified before Congress on June 22 and June 23 on inflation and an economic slowdown.

At the Congressional sessions, Powell Was Pressed Over How Fed Would Respond to Economic Slowdown.  

• “We can’t fail on this. We really have to get inflation down,” Mr. Powell said during the second of two days of testimony. 
• “We’re going to want to see evidence that it really is coming down before we declare ‘mission accomplished”
• “In that hypothetical situation [that growth stalled and unemployment rose] , that would be a setting in which inflation could be expected to come down,” Mr. Powell said. He added, “I think we’d be reluctant to cut.”

• Rep. Alexandria Ocasio-Cortez (D., N.Y.) pressed Mr. Powell to endorse other methods to bring down inflation, such as stiffer antitrust regulation or price controls. Mr. Powell demurred. “There’s been a long history of price controls” when inflation is high, he said, “and it has not been a successful one.”

• Mr. Powell tried to avoid getting pinned down in a partisan fight, but at one point, he allowed that an increase in energy production could bring down gas prices. “Obviously, the more supply there is, the more the price can go down,” he said.

• Powell pushed back against the idea that corporate greed was a primary driver of high inflation. “It is not at all clear that there is a connection between a more concentrated economy and, for example, inflation,” Mr. Powell said.

• To a question as to whether war was responsible for inflation, “No,” Mr. Powell responded. “Inflation was high before—certainly before the war in Ukraine broke out.”