"Inflation is much too high and we understand the hardship it causes," Federal Reserve Chairman Jerome Powell said in opening his post-monetary decision press conference. "We have the tools and the resolve we need to lower inflation."
50 basis point increases "will be on the table for the next couple of meetings," he stated.
"We like to think that supply and demand will come back into balance with wages still strong, but in line with the 2% inflation goal," Powell said.
The FOMC "is not actively considering a 75 bp rate hike," he said.
He's still optimistic that the central bank can engineer a "soft, or softish landing, because U.S. households and businesses are in good financial shape as the U.S. enters the tightening cycle.
3:18 PM ET: Press conference ends.
"Unemployment rates for all racial groups have come down a lot and are much closer to prepandemic," Powell said during the last question of the press conference. "We really want a labor market where all people benefit. To get that...we have to get back to price stability."
3:13 PM ET: "Yes, there's pain" in implementing the policy to deal with inflation, but there would be more pain if it's not dealt with, he said.
3:12 PM ET: Financial markets have responded appropriately when the Fed issues its guidance, Powell said. "That shows that our forward market guidance is credible and we want to keep it that way."
3:08 PM ET: "We're a very long way to neutral now. We're moving there expeditiously," he said. The Fed won't hesitate to move the rate to a restrictive stance "if appropriate."
At 3:03 PM ET, all three major stock averages are trading higher: S&P 500 +1.8%, Nasdaq +1.7%, and Dow +1.8%. 10-year Treasury yield is down 7 basis points to 2.93%; earlier in the session it touched as high as 3.008%.
3:02 PM ET: "There's nothing to suggest" the U.S. economy is at near-term risk of recession, he said. There are a range of opinions on the risk of recession, he acknowledged, but he sees "a plausible path" to reducing demand without putting people out of work.
2:58 PM ET: "Some of us are old enough to have lived through high inflation," Powell said in trying to convey that the Fed understands the pain involved. While the higher policy rates will mean higher mortgage rates, higher borrowing rates, "in the end everyone will be better off," he said. "It won't be easy, but we need to do what we can to restore stable prices."
2:50 PM ET: Longer-term inflation expectations have been reasonably stable but have moved up, Powell said. "We don't see a wage-price spiral.. We know we need to push policy rates" up to more normal levels.
Powell reiterates that the policymakers won't hesitate to push rates higher than neutral if it's needed.
2:48 PM ET: Current estimates of the neutral rate at the Fed is between 2% and 3%, "and that's a long-term range," Powell said. The neutral rate is when the interest rate neither pushes the economy or slows it. That's a concept that isn't precise, he added.
Earlier, Federal Reserve hikes rate by 50 bps, to start shrinking balance sheet in June