Federal Reserve chair Jerome Powell sees inflation battle lasting 'some time,' warns of economic pain
The U.S. economy will need tight monetary policy “for some time” before inflation is under control, Federal Reserve Chair Jerome Powell said on Friday in
JACKSON HOLE, Wyo. — The U.S. economy will need tight monetary policy “for some time” before inflation is under control, Federal Reserve Chair Jerome Powell said on Friday in remarks that warned of slower growth, a weaker job market and “some pain” for households and businesses.
“Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell said in a speech kicking off the Jackson Hole central banking conference in Wyoming.
“These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
As that pain increases, Powell said, people should not expect the Fed to dial back its monetary policy quickly until the inflation problem is fixed.
Some investors anticipate the Fed will flinch if unemployment rises too fast, with some even penciling in interest rate cuts next year, an outlook U.S. central bank officials have leaned hard against in recent weeks.
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