WASHINGTON: Jerome Powell, who chairs the Federal Reserve, says there’s “no guarantee the central bank can tame runaway inflation without hurting the job market.

Speaking at a European Central Bank forum in Sintra, Portugal, Powell repeated his hope that the Fed can achieve a so-called soft landing raising interest rates just enough to slow the economy and rein in surging consumer prices without causing a recession and sharply raising the unemployment rate.”We believe we can do that. That is our aim, he said.

But the Russian invasion of Ukraine, he said, had made the job more difficult by disrupting commerce and driving up the price of food, energy and chemicals.”It’s gotten harder, Powell said. “The pathways have gotten narrower.

Christine Lagarde, president of the European Central Bank, also pointed to the “major impact” of energy shocks, which are rippling worldwide but felt acutely in Europe because of its reliance on Russian oil and natural gas. She also pointed to Europe’s proximity to the war in Ukraine and said “energy was vastly underestimated” in the bank’s assessment of inflation.

The ECB and the Fed were slow to recognize the inflation threat that emerged just over a year ago. They believed that rising prices were the temporary result of supply-chain snags as the economy bounced back with unexpected speed from 2020’s brief but devastating coronavirus recession. But inflation kept accelerating.

The Fed raised its short-term benchmark rate in March and May and appeared to be ready for another half-percentage-point increase at its meeting June 14-15.Then, the Labor Department reported that consumer prices had shot up 8.6% in May from a year earlier the biggest jump since 1981. And the Fed responded by pushing the rate up by three-quarters of a percentage point its biggest hike since 1994.

Increasingly, economists worry that higher rates could push the economy into a recession.But Powell pointed to a strong labor market unemployment is near a half-century low at 3.6% and said most households and businesses have healthy savings.”Overall,″ he said, “the U.S. economy is well-positioned to withstand tighter monetary policy.″Lagarde said that also is true in Europe.

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