Fed Powell: Inflation can be tamed without ‘extremely high social costs’

Federal Reserve Chairman Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, US, July 27, 2022. REUTERS/Elizabeth Frantz

WASHINGTON (Reuters) – Federal Reserve Chairman Jerome Powell said on Thursday that the Federal Reserve was “deeply committed” to getting inflation under control but that there was still hope that could be done without the “extremely high social costs” of past inflation battles.

Referring to former Fed Chairman Paul Volcker’s fight against inflation in the early 1980s, when Fed policy caused a recession and the unemployment rate exceeded 10%, Powell said in comments at the Cato Institute conference that Volcker was trying to root out years of rising inflation expectations. Powell said Volcker “followed several failed attempts” to bring down inflation.

“My colleagues and I are deeply committed (to reducing inflation) … We believe we can avoid the kind of very high social costs that Paul Volcker and the Federal Reserve had to put into effect.”

Additional reporting by Howard Schneider Additional reporting by Anne Sapphire and Lindsay Dunsmuir; Edited by Chizu Nomiyama

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