Fed inflation fight may cause pain to US economy, families: Powell

Federal Reserve Chairman Jerome Powell 

Federal Reserve Chairman Jerome Powell stressed the central bank’s commitment to halting inflation, warning that he expects the Fed to continue raising interest rates in a way that will cause “some pain” to the US economy.

Powell added that the Fed will “use our tools forcefully” to attack inflation that is still running near its highest level in more than 40 years.

He added that this is “no place to stop or pause” even though benchmark rates are probably around an area considered neither stimulative nor restrictive to growth.

The central bank raised the interest rates four times in 2022 to a range of 2.25 – 2.50% after it was almost zero at the beginning of the year.

“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,” he said in prepared remarks. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

Investors are awaiting the Fed’s September meeting, amid disagreements over the possibility of raising interest rates by 75 basis points for the third time in a row, or by only 50 points.