The Fed chief said the US will continue to raise rates and that lowering inflation “will cause pain”

Federal Reserve Chairman Jerome Powell said on Friday that lowering inflation is a process that it will cause pain”To the Americans, but in the same way interest rates will continue to rise until they are sure that the prices are under control to avoid “much greater pain”, which risks weakening the labor market and companies.

In a long-awaited speech at the end of the Fed’s annual meeting in Jackson, Wyoming, the official said that as the central bank moves to slow the rate of investments, spending and hiring “they will reduce inflation, they will also bring some suffering to families and businesses”.

He added: “These are the unfortunate costs of reducing inflation. But failing to restore price stability would mean much greater pain.”

Despite the fallout, Powell pointed out that the Fed it must continue with its policy of raising interest rates to prevent rapid price increases from becoming a fixture in the US economy.

“Restoring price stability will take time and requires the aggressive use of our tools to better balance supply and demand,” said Powell.

Therefore, Powell sent a clear signal that The central bank remains determined to fight inflation and does not plan to deviate from its plan to slow the economy any time soon. Central bankers have spent much of the past year saying they hope to slow the economy smoothly, but Powell’s comments have made it clear that they are willing to do something more drastic to restore price stability to the United States.

After setting an all-time high of 9.1% in June, the highest number in more than four decades, inflation declined slightly in July and stood at 8.5%.a still high vote but that gives respite to the White House.

In an effort to control prices, The Fed raised interest rates from nearly zero in March to a range of 2.25 to 2.5 percent.and investors are awaiting any indication of how quickly and to what extent the Fed will raise rates in the coming months.

In a country where everything is driven by loans, even ordinary citizens are aware of any move that may affect the mortgage on their homes, their furniture or their cars.

Higher interest rates make it more expensive to borrow to build a home or expand a business, slowing economic activity and cooling the labor market, which can ultimately help reduce demand enough to allow supply to catch up. one day and the price increase slows down.

Powell did not provide a clear signal of the pace of the upcoming hikes, but suggested that Fed officials will keep an eye on the incoming data as they decide whether to make a third consecutive three-quarter point hike “unusually” large during their meeting. 20 and 21.

Therefore, he made it clear that central bankers have more work to do in trying to curb the economy and control inflation.

The current level of interest rates “not a place to stop or stop”, Powell said, although he also reiterated that “at some point, as the monetary policy stance further tightens, it is likely that it is appropriate to slow down the pace of increases.”

Powell hailed a slowdown in July inflation as good news, but not good enough to determine that the Fed’s mission is on track to be fulfilled.

“Lower inflation rates in July are welcome, the improvement in just one month is well below what the Committee will need to see before we are confident that inflation is falling,” he said, referring to the Federal Open. Market Committee. politics.

Powell has made it clear that he is willing to crack down on prices. “Central banks can and must take responsibility for providing low and stable inflation,” Powell said. “Our responsibility to offer price stability is unconditional.”