Aug. 26 () –
The president of the United States Federal Reserve (Fed), Jerome Powell, has warned that companies and households will have to endure “some pain” as a toll to tackle the high rates of inflation that the country has been experiencing for months. .
In the traditional summer speech at the Fed’s monetary policy symposium in Jackson Hole, Powell has indicated that failure to curb price escalation “would mean a lot more pain.”
“Restoring price stability will take some time and requires us to use our tools vigorously to bring demand and supply into better balance,” Powell said.
“Reducing inflation will likely require a sustained period of below-trend growth. In addition, there will most likely be an easing of labor market conditions. Although higher interest rates, lower growth and easing of labor conditions lower inflation, they will also inflict some pain on households and businesses,” the central banker stressed.
The president of the Fed has assured that the monetary entity is clearly taking its policies towards a “restrictive enough” level to return inflation to the 2% target.
In this sense, Powell has warned that recovering this stability will probably require a restrictive monetary policy for some time. In addition, he has stressed that historical experience “warns against premature loosening of monetary policy.”
In just three months, the Fed has carried out a series of aggressive interest rate hikes. In May, it raised the price of money by 50 basis points, while in June and July it decided to carry out increases of 75 basis points.
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