Biden’s Fed Chairman: Solving Inflation ‘Highly Likely To Involve Some Pain’ For Americans

On Wednesday, Federal Reserve Chairman Jerome Powell said that solving the inflation crisis is “highly likely” to cause pain to Americans but that it would be less painful than not addressing inflation.

During the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?

“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” he responded.

“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” Powell added.

Powell’s comments come as inflation has reached the highest rate in more than 40 years with prices rising 8.6% from May 2021 to May 2022, according to a new report from the Bureau of Labor Statistics.

In order to bring down inflation, the Federal Reserve increased the interest rate by 0.75% earlier this month – the highest increase since 1994 – and warned of additional increases in the interest rate in the future.

“The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%. The federal funds rate dictates what it costs for banks to borrow money from each other. And, generally, higher interest rates mean it’s more expensive for consumers to get a mortgage, obtain a loan to buy a vehicle and to carry a balance on a credit card,” NBC News reported. “The expected effect of these changes is that consumers will spend less and the heightened demand for goods — one of the drivers of inflation — will slow down.”