Jay Powell said a US recession is “certainly a possibility” and warned that avoiding a downturn now largely depends on factors outside the Federal Reserve’s control.

In testimony to the Senate banking committee on Wednesday, the Fed chair acknowledged it was now more challenging for the central bank to root out soaring inflation while maintaining a strong job market.

He argued the US was sufficiently resilient to withstand tougher monetary policy without sliding into a downturn but acknowledged that outside factors, such as the war in Ukraine and China’s Covid-19 policy, could further complicate the outlook.

“It’s not our intended outcome at all, but it’s certainly a possibility,” Powell said, responding to a question about the risk the Fed’s plans to raise rates this year could lead to a recession.

He added that because of the “events of the last few months around the world”, it was “now more difficult” for the central bank to achieve its goals of 2 per cent inflation and a strong labour market.

“The question of whether we are able to accomplish that is going to depend to some extent on factors that we don’t control,” he said, in a reference to soaring commodity prices stemming from Russia’s invasion of Ukraine and clogged-up supply chains because of China’s lockdowns.

Lawmakers pressed Powell several times about the burden imposed by the Fed’s recent moves to combat inflation, now at 8.6 percent, the highest in four decades. The central bank last week put in place the biggest interest rate increase since 1994, signaling its support for what is set to be the most forceful campaign to tighten monetary policy since the 1980s.

“You know what’s worse than high inflation and low unemployment? It’s high inflation and a recession with millions of people out of work,” said Elizabeth Warren, the progressive Democratic senator from Massachusetts. “I hope you will reconsider that before you drive this economy off a cliff.”

Powell said in a separate exchange there would be considerable risks if the Fed did not act to restore price stability, with inflation becoming entrenched.

“We know from history that that will hurt the people we’d like to help, the people in the lower-income spectrum who suffer now from high inflation,” he