Federal Reserve Chairman Jerome Powell said that he sees a path to bringing down inflation without crashing the economy, although he said it will be challenging.

Powell, a Republican who was recently renominated by President Joe Biden, was asked about how the Fed will avoid a recession during a press conference following the central bank’s Wednesday announcement that it is hiking its interest rate target by a half-percentage point.

“In principle, it seems as though by moderating demand, we could see [job] vacancies come down as a result … and I think put supply and demand at least closer together than they are, and that would give us a chance to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially,” Powell said.

“So, there is a path to that. Now, I would say I think we have a good chance to have a soft, or a softish, landing or outcome, if you will,” he said.

FED CARRIES OUT HISTORIC INTEREST RATE HIKE IN ATTEMPT TO COUNTER INFLATION

“Soft landing” means driving down inflation while avoiding the economy falling into a tailspin. Many economists have said it will be difficult for the Fed to do so because it will have to hike rates more aggressively given the rising prices.

Powell said that households and businesses are in “very strong” financial shape. He also noted how strong the current labor market is, adding that it doesn’t appear to be anywhere close to a downturn. Therefore, the economy is robust enough to handle tighter monetary policy, the chairman said. At 3.6% in March, the unemployment rate is extremely low by historical standards.

“I’ll say, I do expect that this will be very challenging, it’s not going to be easy, and it may well depend, of course, on events that are not under our control,” Powell added.

Prior to Powell’s speech, the Fed announced the most aggressive interest rate hike in more than two decades and said it would shrink its balance sheet in response to the inflation plaguing the economy.

Consumer prices increased by 8.5% for the 12 months ending in March, according to the consumer price index, the fastest clip since 1981.

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While expected by investors, the half-point hike was notable because the central bank typically raises rates by just a quarter of a percentage point, so the move signals that the Fed is highly concerned with the quickly rising prices.

On Wednesday, Powell said that more half-percentage-point rate hikes are on the table for the June and July Fed meetings, although he said that the central bank is “not actively considering” even bigger increases.