Powell reflects on inflation policy, admitting that earlier interest rate hikes may have been more beneficial.

Fed Chair Powell recently acknowledged in an interview that raising interest rates earlier might have been more beneficial for controlling inflation. This statement reflects his reconsideration of the previous stance of "transitory inflation."

In the face of persistently high inflationary pressures, Powell stated: "If we could do it all over again, we might consider raising interest rates earlier. But at that time, we could only make decisions based on the real-time information we had, and we did our best." This statement reflects his helplessness and regret regarding the current situation.

The U.S. Senate recently confirmed Powell's nomination for reappointment as the Fed Chair. However, due to the surge in prices affecting voters, some senators have shown weakened support for him.

For most of last year, the Fed maintained that rising inflation was "transitory," primarily focused on sectors of the economy affected by the pandemic and supply chain disruptions. However, as time went on, the impact of inflation on the economy continued to expand, and the public increasingly felt the pressure of rising food, energy, and housing prices.

To address this situation, the Fed had to adjust its policy stance. Powell emphasized at a press conference: "Our task is to ensure that this unpleasantly high inflation does not become entrenched in the economy. This is the core of our work and possibly the most fundamental goal."

The challenge facing the Fed is to achieve a "soft landing" for the economy while controlling inflation. This means they need to find a balance between raising interest rates to curb inflation and sustaining economic growth. Powell stated that if economic performance meets expectations, it would be appropriate to raise rates by 50 basis points at the next two meetings. However, he also emphasized that the Fed will adjust its policies flexibly based on changes in economic data.

When asked whether it is possible to raise interest rates by 75 basis points at once, Powell did not answer directly, but stated that the committee will adjust its policy based on future data and changes in the economic outlook. This cautious approach indicates that the Fed will maintain flexibility and adaptability in responding to the current complex economic situation.