US Federal Reserve chairman Jerome Powell has delivered a stark message, saying the Fed is likely to impose more large interest rate hikes in coming months and is resolutely focused on taming the highest inflation in four decades.
Mr Powell acknowledged that the Fed’s continued tightening of credit will cause pain for many households and businesses as its higher rates further slow the economy and potentially lead to job losses.
“These are the unfortunate costs of reducing inflation,” Mr Powell said in the written version of a high-profile speech he is giving at the Fed’s annual economic symposium in Jackson Hole, Wyoming.
“But a failure to restore price stability would mean far greater pain.”
Mr Powell’s message may disappoint investors who were hoping for a signal that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing.
After hiking its key short-term rate by three-quarters of a point at each of its past two meetings, part of the Fed’s fastest pace of rate increases since the early 1980s, Mr Powell said the Fed might ease up on that pace “at some point” – suggesting that any such slowing is not near.
The Fed chairman made clear he expects rates to remain at levels that should slow the economy “for some time”.