Economic strength suppresses deflation risk — Federal Reserve Chair Powell maintains a hawkish stance

Federal Reserve officials, including Chairman Powell, have indicated that a solid economic outlook can effectively suppress deflationary pressures. This statement reflects the central bank’s strong confidence in the current economic recovery.

The Economy’s Resilience as Assessed by the Central Bank

According to ChainCatcher, Powell’s remarks serve as an important indicator of the confidence level the central bank has in the current economic environment. His assessment is based not merely on optimistic forecasts but on analysis rooted in actual economic data. The logic is that as long as strong economic growth continues, the risk of deflation remains limited.

Balancing Inflation and Economic Stability

Powell’s comments are made within the dilemma of continuing inflation measures versus maintaining economic stability. When adjusting interest rates and setting monetary policy directions, the central bank must simultaneously remain cautious about deflation. Relying on economic strength as a foundation, the goal is to balance inflation control with avoiding deflation risks—this is the current policy stance.

Even amid increasing economic uncertainty, the Federal Reserve seems to believe that sustained growth is the best defense against deflation.