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Amid global inflation Fed Chair Powell says ‘there are two-sided risks’ to raising interest rates

Federal Reserve Chairman Jerome Powell speaks about ‘two-sided risks’ when raising interest rates to counteract inflation. Powell spoke on July 27, 2022.

Video Transcript

JEROME POWELL: We're trying not to make a mistake. Let me put it this way, we do see that there are two-sided risks. There would be the risk of doing too much, and you know, imposing more of a downturn on the economy than was necessary. But the risk-- the risk of doing too little and leaving the economy with this entrenched inflation, it only raises the cost.

If you fail to deal with it in the near term, it only raises the cost of dealing with it later. To the extent people start to see it as just part of their economic lives. They start to factor high inflation into their decisions-- when that-- on a sustained basis. When that starts to really happen-- and we don't think that's happened yet, but when that starts to happen, it just gets that much harder and the pain will be that much greater. So I really do think that it's important that we address this now.