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Fed Chair Jerome Powell Says He Doesn't Know If He's Causing A Recession

Added 09-21-22 04:54:03pm EST - “Powell spoke more candidly than before about the economic risks of hiking interest rates in order to reduce inflation.” - Huffpost.com

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Posted By TheNewsCommenter: From Huffpost.com: “Fed Chair Jerome Powell Says He Doesn't Know If He's Causing A Recession”. Below is an excerpt from the article.

Federal Reserve Chair Jerome Powell said Wednesday he doesn’t know if higher interest rates will cause a recession, but he does know that the economy has a pay a price in order for inflation to come down.

“We don’t know ― no one knows whether this process will lead to a recession, or if so, how significant that recession would be,” Powell told reporters at a press conference.

The Fed announced another three-quarter-point interest rate hike on Wednesday as part of its strategy to slow inflation by slowing economic growth.

Higher interest rates make money more expensive to borrow, resulting in households and businesses spending less, which in turn should cause businesses not to raise prices as much. But there could be collateral damage in the form of mass layoffs since businesses would be making less money.

The average of economic projections among Federal Reserve officials, released Wednesday alongside the rate hike announcement, suggests higher interest rates could push unemployment to 4.4% next year, with personal consumption expenditure inflation coming down to 2% in 2025.

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