Federal Reserve Chair Jerome Powell warned Wednesday that there is "no guarantee" the central bank will be able to bring inflation to heel without sacrifices in the job market, while reiterating policymakers' aim to achieve a soft landing in their effort to rein in surging prices.
Speaking at the European Central Bank's policy conference in Portugal, Powell said that supply and demand are "really out of balance in many parts of the U.S. economy," and pointed to the labor market as "being a big example of that."
He said those imbalances need to be evened out in order to bring inflation down.
"We think that there are pathways for us to achieve that, to achieve the path back to 2% inflation while still retaining sustaining a strong labor market. We believe we can do that. That is our aim," Powell said, before adding, "There's no guarantee we can do that."
Powell went on to say achieving that is "going to be quite challenging," and that it was made even more difficult by the impacts from Russia's war on Ukraine, which has exacerbated supply chain issues and shortages and caused prices for staples like food and gasoline to surge even higher.
"It's gotten harder," he said. "The pathways have gotten narrower."
The Fed chief also acknowledged that "there is a risk" that the central bank could slow the economy more than necessary to achieve its target of 2% inflation, but he warned that "the bigger mistake would be to fail to restore price stability."