JACKSON HOLE, Wyoming (AP) – Federal Reserve Chair Jerome Powell delivered a stark message Friday: The Fed will likely impose more large interest rate hikes in the coming months and is resolutely focused on taming the highest inflation in four decades.
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,” Powell said in the written version of a high-profile speech he is giving at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”
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 – Powell said the Fed might ease up on that pace “at some point” – suggesting that any such slowing isn’t near.
The Fed chair made clear that he expects rates to remain at levels that should slow the economy “for some time.”
According to a Commerce Department report Friday that is closely watched by the Federal Reserve, consumer prices rose 6.3% in July from a year earlier after posting an annual increase of 6.8% in June, the biggest jump since 1982. Energy prices made the difference in July: They dropped last month after surging in June.
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