Topline
The Federal Reserve has no plans to take its foot off the gas in its tightening campaign aimed at curbing inflation, the central bank’s chairman Jerome Powell said Friday morning at the Fed’s annual symposium in Jackson Hole, Wyoming.
Key Facts
“It is the Fed’s job to bring inflation down to our 2% goal, and we will do so,” Powell began his prepared remarks.
The Fed is “prepared” to raise interest rates further “if appropriate,” Powell indicated; the federal funds rate currently sits at a 22-year high.
The war on inflation has a “long way to go even with the more favorable recent readings,” Powell added.
Stocks were little changed immediately after Powell’s speech began, and the Dow Jones Industrial Average, S&P 500 and tech-heavy Nasdaq were each in the green.
Big Number
4%. That’s how much the S&P is down so far in August, on pace for its worst month of 2023.
Key Background
Jackson Hole is the site of the Fed’s summer summit discussing the broad direction of American monetary policy. At last year’s meeting, Powell cautioned Americans about impending “pain” stemming from an elevated interest-rate environment as inflation raged. Investors felt the pain immediately, as the Dow, S&P and tech-heavy Nasdaq indexes each fell 10% or more in the month after Powell’s address. The S&P remains down 8% from the beginning of last year, when rates stood near zero.
Tangent
2022’s historic surge in inflation actually came after Powell dismissed the effect of pandemic-driven price increases at Jackson Hole in 2021, describing inflation as “temporary” on five different occasions during his keynote speech. Core inflation has since come back down to a more palatable 4.7%, but remains well above the Fed’s long-stated 2% target.
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