The Federal Reserve must continue to raise interest rates and keep them at a higher level until it is sure that inflation is under control, “a process that” risks weakening the labor market and causing some pain to the labor market. households and businesses “. Fed chairman Jerome Powell said this in an expected speech in Jackson Hole. “We will vigorously use all the tools we have at our disposal to tame inflation,” Powell added. Efforts to reduce inflation will likely result in “some pain” for the economy but not “restoring price stability would be even more painful.”
The US economy “is clearly slowing down from the high growth rates of 2021”, but the “labor market is particularly strong”. Fed chairman Jerome Powell said this, stressing that the slowdown in the inflation rush in July is good news but a “single month of improvement” is not enough for the Fed.
The Federal Reserve will calibrate the rate hike in its September meeting after a careful assessment “of the set of macro data to come and the evolving outlook.” Powell spoke of the possibility of another hike in the reference rate from 75 basis points – as happened in July – but without excluding an increase of less than 50 points. And he stressed that “at a certain point with the monetary line that will further tighten it is probable that there will be a slowdown in the rate hikes”.