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🇰🇷 South Korea /Economy & Trade

US Fed Chair signals further tightening on inflation worries, markets dip

From Hankyoreh · () Korean

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

At a glance

News Named sources Context piece
  • Federal Reserve Chair Jerome Powell expressed concern over U.S. inflation, signaling potential further interest rate hikes if necessary.
  • Powell stated that "entrenched" inflation requires the Fed to ensure price stability, noting that inflation remains above the 2% target.
  • Following his remarks at the Jackson Hole symposium, New York stock markets experienced a decline, with the Dow Jones, S&P 500, and Nasdaq all closing lower.

Federal Reserve Chair Jerome Powell has signaled a potential for further interest rate hikes, citing persistent concerns over U.S. inflation. Speaking at the Jackson Hole Economic Symposium, Powell emphasized the need for confidence that inflation is moving sustainably toward the Fed's 2% target. "If we are not confident, we will not hesitate to take further action," he stated, underscoring the central bank's commitment to its price stability mandate.

We must be confident that inflation is moving in a sustained way toward our 2 percent goal. If we are not confident, we will not hesitate to take further action. That is our job, and that is our responsibility, and we will do the job.

— Jerome PowellChair of the Federal Reserve, speaking at the Jackson Hole Economic Symposium.

Powell described the current inflation indicators as "elevated" and "concerning," noting that key measures like the Personal Consumption Expenditures (PCE) price index have risen 3.8% year-on-year as of July. He acknowledged the Fed's responsibility for the prolonged period of high inflation, stating, "The responsibility for bringing inflation back down to our 2 percent goal, and keeping it there, lies squarely with us."

Despite these concerns, Powell also offered a relatively optimistic outlook on the broader economy, suggesting that overall financial conditions are not yet restrictive enough to warrant a complete halt to tightening. He indicated that the Fed is closely monitoring incoming data to guide future policy decisions.

On the price stability side of our mandate, we see elevated inflation and we are committed to restoring price stability.

— Jerome PowellFederal Reserve Chair on the current inflation situation.

The markets reacted negatively to Powell's remarks, interpreting them as a signal of a potential September rate increase. The Dow Jones Industrial Average fell 9.45 points (0.02%) to close at 53,559.99. The S&P 500 index decreased by 19.28 points (0.25%) to 7,711.76, and the Nasdaq Composite dropped 138.93 points (0.52%) to 26,402.42, reflecting investor apprehension about continued monetary tightening.

The responsibility for bringing inflation back down to our 2 percent goal, and keeping it there, lies squarely with us.

— Jerome PowellAcknowledging the Fed's role in managing inflation.
About this summary

Originally published by Hankyoreh 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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