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Powell’s hawkish Jackson Hole message makes plain the costs ahead for taming US inflation

Posted On: 5th September 2022
Federal Reserve Chair Jerome Powell forcefully rebutted the expectations of an early dovish monetary policy pivot, reminding markets that interest rates will continue to climb and remain elevated for some time in its “unconditional” pursuit of price stability.

In his much-anticipated remarks from the Fed’s annual Jackson Hole policy meeting, Powell said reducing inflation will create slower US growth and soften labour market conditions which will “bring some pain to households and businesses”. These future consequences for the US economy are the cost of taming 40-year high annual inflation, he said, adding: “Without price stability, the economy does not work for anyone.” Powell emphasised that he supported the Fed’s rationale, saying: “The historical record cautions strongly against prematurely loosening policy.

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