Fed pledges ‘unconditional’ approach to curb inflation in report to Congress

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The chairman of the board of the United States Federal Reserve, Jerome Powell, answers questions during a news conference following a two-day meeting of the Federal Open Market Committee after the Federal Reserve raised its target rate by three-quarters of a percentage point to prevent a disruptive rise in the curb inflation. (FOMC) in Washington, June 15, 2022.

Elizabeth Frantz | Reuters

Federal Reserve officials on Friday rolled out strong language to describe their approach to inflation, promising a full-fledged effort to restore price stability.

In its annual monetary policy report — heralding Chairman Jerome Powell’s appearance before Congress next week — the central bank pledged that it would do everything it could to reduce inflationary pressures at the fastest pace in more than 40 years. .

“The Committee’s commitment to restore price stability — which is necessary to maintain a strong labor market — is unconditional,” the Fed said in a report to Congress.

That marks the Fed’s strongest statement yet, confirming its commitment to continue to raise interest rates and otherwise tighten policies to solve the economy’s main problem.

The statement did not elaborate on what “unconditionally” means.

Earlier this week, the Fed raised its benchmark rate by three-quarters of a percentage point in a further attempt to slow demand. Market participants worry that the Fed tightening could spark a recession, though Powell said he still believes it can be avoided.

The rate hike came after a move in May to raise interest rates by half a point. This week’s move was the most aggressive since 1994.

In addition to rate hikes, the Fed is also reducing the assets of its $9 trillion balance sheet by allowing some of the proceeds from bonds it holds to flow out.

Earlier in the day, Powell himself made a similar vow, saying he and the rest of the Fed are “acutely focused” on curbing inflation.



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