Highlights

  • Powell faces questions over why the Fed waited until March to raise interest rates
  • Fed Chair faced questions at a Senate Banking Committee hearing

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'Can high rates really bring down inflation?' Fed Chief faces brutal questioning

Fed Chair Powell was asked if Fed rate increases will lower gas prices, which have hit record highs this month.

The Fed Chairman Jerome Powell faced a firing squad of questions as he appeared before the Senate Banking Committee that questioned the rationale of rate hikes. First of the block, US Senator Elizabeth Warren probed Fed chair Jerome Powell while telling him sternly "Don't 'drive this economy off a cliff."

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Warren asked Powell if Fed rate increases will lower gas prices, which have hit record highs this month.
"I would not think so," Powell said.

Warren asked if grocery prices will go down because of the Fed's war on inflation.
"I wouldn't say so, no," Powell said.

Inflation is like an illness, and medicine needs to be tailored to the specific problem. Otherwise you could make things a lot worse," Warren told Fed Chairman Jerome Powell during the hearing. "You could actually tip the economy into a recession," she said. The Fed has no control over global oil prices that are driving up gas prices, Warren said. "What's worse than high inflation and low unemployment?" Warren asked. "High inflation and recession with millions of people out of work," she answered. "I hope you consider that before you drive this economy off a cliff," she said.

Powell’s testimony comes exactly a week after the Fed announced its three-quarters-of-a-point increase, its biggest hike in nearly three decades. With inflation at a 40-year high, the Fed’s policymakers also forecast a more accelerated pace of rate hikes this year and next than they had predicted three months ago.

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