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Fed Chair signals readiness for further rate hikes if inflation persists
🇰🇷 South Korea /Economy & Trade

Fed Chair signals readiness for further rate hikes if inflation persists

From Dong-A Ilbo · () Korean

Translated from Korean and summarized by DistantNews. Read the original for the full story.

At a glance

News From a news agency Context piece
  • Federal Reserve Chair Jerome Powell indicated the Fed is prepared to raise interest rates further if inflation does not sufficiently decrease.
  • Powell emphasized that achieving price stability is the Fed's primary mission, expressing concern over recent inflation data.
  • His remarks at the Jackson Hole meeting have increased speculation about a possible September rate hike, though he cautioned against interpreting his comments as forward guidance.

Federal Reserve Chair Jerome Powell signaled a continued hawkish stance on inflation, stating that the central bank has "more work to do" to bring price increases back to its 2% target. Speaking at the Jackson Hole economic symposium on August 28th (local time), Powell expressed concern that inflation is not moving down fast enough, suggesting the Fed remains ready to implement further interest rate hikes if needed.

If we are not confident that inflation is moving down decisively toward our goal, we will not hesitate to take further action.

— Jerome PowellStating the Fed's readiness to raise interest rates if inflation remains high.

"We are attentive to the implications of persistently elevated inflation," Powell stated, emphasizing that price stability is the Fed's "unconditional commitment." He noted that recent inflation figures are more concerning and that current financial conditions cannot be described as restrictive. The Fed's 2% inflation target has remained unmet for over five years.

Powell's remarks come ahead of the Federal Open Market Committee's (FOMC) September meeting, fueling speculation about another rate increase. The Fed had previously discussed the necessity of further hikes during its July meeting, where three members advocated for a 0.25 percentage point increase, even as the benchmark rate was held steady at 3.50-3.75%.

Price stability is the anchor of our economy. Without it, the economy runs unsafely.

— Jerome PowellEmphasizing the importance of controlling inflation.

Some media outlets interpreted Powell's speech as preemptive guidance for a rate hike. The stock market reacted negatively, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closing lower on the day. However, Powell also urged caution against viewing his comments as definitive forward guidance for future policy decisions, reaffirming the Fed's stance of not pre-committing to specific actions at particular meetings.

We are attentive to the implications of persistently elevated inflation.

— Jerome PowellExpressing concern over the ongoing high inflation rates.

The FOMC is scheduled to convene on September 15-16 to decide on the benchmark interest rate. Powell's emphasis on inflation control suggests that the Fed will maintain a data-dependent approach, closely monitoring economic indicators to determine the appropriate course of monetary policy.

We have more work to do to ensure that we return inflation to 2 percent.

— Jerome PowellIndicating that the Fed's task of curbing inflation is not yet complete.
About this summary

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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