Jerome Powell says the Federal Reserve will likely impose more large interest rate hikes in coming months and is resolutely focused on taming the highest...
Jerome Powell says the Federal Reserve will likely impose more large interest rate hikes in coming months and is resolutely focused on taming the highest inflation in four decades.
“These are the unfortunate costs of reducing inflation,” he said in a high-profile speech at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.” Powell said the size of the Fed’s rate increase at its next meeting in late September — whether one-half or three-quarters of a percentage point — will depend on inflation and jobs data. An increase of either size, though, would exceed the Fed’s traditional quarter-point hike, a reflection of how severe inflation has become.
Powell’s speech is the marquee event of the Fed’s annual economic symposium at Jackson Hole, the first time the conference of central bankers is being held in person since 2019, after it went virtual for two years during the COVID-19 pandemic. In June, the Fed’s policymakers signaled that they expected their key rate to end 2022 in a range of 3.25% to 3.5% and then to rise further next year to between 3.75% and 4%. If rates reached their projected level at the end of this year, they would be at the highest point since 2008.
At the same time, inflation is still crushingly high, though it has shown some signs of easing, notably in the form of declining gas prices.At its meeting in July, Fed policymakers expressed two competing concerns that highlighted their delicate task.
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