STORY: POWELL: "Of course, we're not - we're not trying to provoke and don't think that we will need to provoke a recession.”
Fed Chair Jerome Powell told lawmakers Wednesday the Federal Reserve is not trying to engineer a recession to stop inflation, but is fully committed to bringing prices under control even if doing so risks an economic downturn.
POWELL: "We are strongly committed to bringing inflation back down and we're moving expeditiously to do so."
SENATOR JON TESTER: "But do you agree with the perspective that if interest rates go too high, too fast, it could drive us into a recession?"
POWELL: "It's certainly a possibility. It's not our intended outcome at all. But it's certainly a possibility."
With inflation running at 40-year highs - with soaring prices for everything from gas to groceries - the Fed is racing to get ahead of the problem.
Just last week it raised interest rates by three-quarters of a percentage point - its biggest hike since 1994.
But that aggressive strategy, designed to slow the economy, has sparked widespread concern that the Fed will overdo it... with criticism coming Wednesday from the left and the right.
WARREN: "Chair Powell, will gas prices go down as a result of your interest rate increase?"
POWELL: "I would not think so, no."
Democratic Senator Elizabeth Warren:
"You could actually tip this economy into recession. So I just want to say, you know, what's worse than high inflation and low unemployment? It's high inflation and a recession with millions of people out of work. And I hope you'll reconsider that as you drive this before you drive this economy off a cliff."
Republican Senator John Kennedy of Louisiana also slammed the Fed’s inflation response.
"Inflation is hitting people so hard they're coughing up bones, it's the highest in 40 years." (flash) "Now we've got a hell of a mess."
But Powell told lawmakers that ongoing increases in the Fed's policy rate would be appropriate, adding that the Fed in coming months will be looking for "compelling evidence" of slowing price pressures before it eases up on the interest rate increases.
But with Russia's invasion of Ukraine and COVID-19 lockdowns in China, Powell said upward pressure on inflation could continue...
"Inflation has obviously surprised to the upside over the past year, and further surprises could be in store.”