Fed Chair Says Interest Rates Should Have Gone Up Sooner

Federal Reserve Chair Jerome H. Powell acknowledged in an interview with Marketplace on Thursday that the central bank could have moved faster to raise interest rates and cut inflation, as the central bank comes under increasing scrutiny over whether it waited too long to act on prices. From a report: "If you had perfect hindsight you'd go back, and it probably would have been better for us to have raised rates a little sooner," Powell said in an interview released Thursday with Marketplace's Kai Ryssdal. "I'm not sure how much difference it would have made, but we have to make decisions in real time, based on what we know then, and we did the best we could." Powell's comments mark a sharper sentiment of regret than his past remarks when it comes to whether the Fed should have stepped in sooner. The Fed has faced criticism, primarily from Republicans and some prominent economists, such as Lawrence H. Summers, for delaying interest rate hikes and ending stimulus-era financial supports, which work together to cool off the economy and bring inflation down. Powell, who was confirmed by the Senate for a second term as Fed chair earlier Thursday, lost a handful of votes from lawmakers who said their constituents were suffering too much from high prices on his watch. For much of the last year, the Fed stuck to its message that rising inflation would be "transitory," or temporary, and more limited to pockets of the economy hit hard by the coronavirus pandemic and related shutdowns and supply chain disruptions. At WSJ conference on Tuesday, Powell emphasized his resolve to get inflation down, saying he won't hesitate to back interest rate increases until prices start falling back toward a healthy level. "We'll go to that point. There won't be any hesitation about that," he added.

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