Breaking: Fed's Powell says restoring price stability to require a restrictive policy stance for 'some time'
|US Federal Reserve (Fed) President Jerome Powell is delivering opening remarks and speaking about the policy outlook at the central bank’s annual Jackson Hole Economic Symposium, in Wyoming.
Key quotes
Central bank is moving policy 'purposefully' to a level sufficiently restrictive to return inflation to 2%.
Restoring price stability will take some time, require using central bank's tools 'forcefully'.
Reducing inflation likely to require sustained period of below-trend growth.
There will very likely be some softening of labor conditions, some pain to households.
These are the unfortunate costs of reducing inflation, but failing to restore price stability would mean far greater pain.
Benchmark overnight interest rate at long-run neutral estimate of 2.25%-2.50% 'not a place to stop or pause'.
Overarching focus is to bring inflation back down to 2% goal.
Decision on September rate hike will depend on totality of data since July meeting.
At some point, as policy stance tightens further, it will be appropriate to slow pace of rate increases.
Restoring price stabilty will likely require maintaining a restrictive policy stance for 'some time'.
Fed must keep at it until the job is done.
Historical record cautions strongly against loosening policy prematurely.
US economy clearly slowing, but has strong underlying momentum.
Labor market is particularly strong, but out of balance; high inflation has continued to spread.
July's lower inflation readings welcome, but short of what will be needed before central bank is confident inflation is moving down.
Central bank committed to moderating demand to better align with supply.
The longer high inflation continues, the greater the chance it will become entrenched.
Market reaction
In an immediate reaction to Powell’s comments, the US dollar index was largely unchanged, keeping its range near-daily lows of 107.71. The gauge is shedding 0.62% on the day.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.