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…….
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Rising Dough
How does the Fed’s response to inflation affect the economy and consumers?
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The Fed’s past and recent responses should hopefully reduce inflation. This is good because it will make everyday items more affordable and keep the market for goods and labor less volatile like how it has been over the past couple of years.
I feel the feds are going to slow economic growth often lowers the inflation rate and may prompt rate cuts. This will help everyday items become cheaper.