Powell warns of ‘pain to households and businesses’ in bringing down inflation

SIMONE DEL ROSARIO:
THIS WEEK – THE CENTER OF THE BUSINESS UNIVERSE IS NOT NEW YORK CITY. NO, FOR THAT WE GO TO

JACKSON HOLE WYOMING FOR AN ECONOMIC SYMPOSIUM, WHERE THE ENTIRE GLOBE WAITED TO HEAR WHAT FEDERAL RESERVE CHAIR JEROME POWELL HAD TO SAY.
JEROME POWELL:

Today, my remarks will be shorter, my focus narrower and my message more direct.

SIMONE DEL ROSARIO:

POWELL STAYED HAWKISH IN HIS HIGH-PROFILE SPEECH…NOTING THERE’S NO SLOWING DOWN, THE FED PLANS TO CONTINUE MOVING PURPOSEFULLY TOWARD RESTRICTIVE MONETARY POLICIES.

JEROME POWELL:

While the lower inflation readings for July are certainly welcome. A single month improvement falls far short of what the committee will need to see before we are confident that inflation is moving down.

SIMONE DEL ROSARIO:

AND THOSE MOVES COME WITH A WARNING.

JEROME POWELL:

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. These are the unfortunate costs of reducing inflation.

SIMONE DEL ROSARIO:

POWELL NOTED HE’S DRAWING FROM HARSH INFLATION LESSONS LEARNED IN THE 70S AND 80S, WHEN CONSUMER PRICES PEAKED NEAR 15%. TODAY’S INFLATION IS 8.5.

JEROME POWELL:

A lengthy period of very restrictive monetary policy was ultimately needed to stem high inflation. Our aim is to avoid that outcome by acting with resolve now.

SIMONE DEL ROSARIO:

AND THAT RESOLVE SENT MARKETS SINKING.

I’M SIMONE DEL ROSARIO AND IT’S JUST BUSINESS.