Tough measures will be taken against inflation, which jeopardizes the recovery of the country’s economy, said the head of the U.S. Federal Reserve Jerome Powell. About it writes CNBC.

At the same time, he noted the continuation of the Fed’s tightening course: the interest rate hike will last until inflation, which has already reached the highest level in 40 years, will not be brought under control.

Recall that the first rate hike took place last week and was the first in more than 3 years. If necessary, the rate hike could be tighter: 50 basis points instead of the traditional 25 basis points.

“The labor market is very strong and inflation is too high,” the central bank governor said at a speech for the National Association for Business Economics. – We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to act more tightly by raising the federal funds rate by more than 25 basis points, we will do so. And if we determine that we need tightening beyond normal measures and a more restrictive stance is required, we will do so as well.”

Recall that one basis point equals 0.01%.

The Fed’s Open Market Committee has indicated that rate hikes of 25 basis points are likely at each of the remaining 6 meetings this year. However, the market estimates the odds are about 50/50 that the next rate hike at the May meeting could be 50 basis points.

The Fed’s sudden tightening of monetary policy has been accompanied by inflation, as measured by the Consumer Price Index (CPI), which was 7.9% over 12 months, while the Fed’s preferred indicator still shows prices rising 5.2%, well above the central bank’s 2% target.

Powell attributed much of the inflationary pressure to specific factors, and COVID-19 in particular, as well as increased demand for goods versus services that available supply has been unable to meet. He acknowledged that Fed officials and many economists had “grossly underestimated” how long these pressures would last.

While these aggravating factors remain, the Fed and Congress have provided more than $10 trillion in fiscal and monetary stimulus to the economy since the pandemic began. Powell still believes inflation will return to the Fed’s target, but it is time to end historically easy monetary policy.

Another factor in inflation is the Russian special operation in Ukraine, which is exacerbating the supply chain. Under normal circumstances, the Fed would not change its monetary policy. However, since the outcome of the conflict is unclear, he said the situation should be viewed with caution.

“In normal times, when employment and inflation are close to our targets, monetary policy accommodates a short-term spike in inflation associated with commodity price shocks,” he said. – However, there is an increasing risk that a prolonged period of high inflation could lead to an undesirable rise in longer-term expectations, underscoring the need for swift action by the committee.”

Powell said last week that the committee is also ready to start getting rid of nearly $9 trillion of assets on its balance sheet, a process that could likely begin as early as May.