(Bloomberg) -- Federal Reserve Chair Jerome Powell said the US economy is in “strong shape” and the central bank can reduce inflation to 2% while maintaining a solid labor market, even though that task has become more challenging in recent months.

“We hope that growth will remain positive,” Powell said during a panel discussion Wednesday during the European Central Bank’s annual policy forum in Sintra, Portugal. Household and business finances are also in solid shape, and “overall the US economy is well positioned to withstand tighter monetary policy.” 

Read Bloomberg’s TOPLive blog on the ECB conference panel

Raising interest rates without sparking a recession “is our aim and we believe there are pathways to achieve that,” Powell said.

Policy makers raised interest rates by 75 basis points on June 15 and Powell signaled that another move of that size -- or a 50 basis-point increase -- was on the table when they meet again in late July. 

Powell and his colleagues have pivoted aggressively to fight the hottest inflation in 40 years amid criticism that they left monetary policy too easy for too long as the economy recovered from Covid-19. They’ve raised rates by 1.5 percentage points this year and officials forecast about 1.75 points of further cumulative tightening in 2022.

The shift to higher rates has rocked financial markets as investors fret the Fed could trigger a recession. About a third of economists predict a US recession as likely in the next two years, 21% seeing some time with zero or negative growth likely and the rest looking for the Fed to achieve a soft landing of continuing growth and low inflation, according to a survey earlier this month.

Powell spoke on a panel with ECB President Christine Lagarde and Bank of England Governor Andrew Bailey. All three central bankers are trying to lower inflation, which has become a global problem exacerbated by supply-chain disruptions associated with the Covid-19 pandemic as well as surging food and energy prices in the wake of Russia’s invasion of Ukraine.

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