Fed Chairman Jerome Powell stated that the U.S. central bank will use its tools forcefully to bring down inflation that is running near its 40-year high.
Speaking on Friday at Jackson Hole, Wyoming, the Fed’s Chairman noted that higher interest rates likely will persist for some time, while the central bank’s action on September’s meeting will depend on the totality of the incoming economic data.
Earlier today, the US July Core PCE Price Index (MoM) came out at 0.1% vs 0.3% expected and 0.6% in June. The figure rose 4.6% on a year-on-year basis, but fell short of 4.7% expected and 4.8% in June. US July Personal Spending (MoM) was 0.1% vs 0.4% expected and 1.0% in June.
The Consumer Price Index (CPI) of the United States of America slowed down to 8.5% in July, beating economists’ forecast of 8.7% after hitting a fresh 40-year high of 9.1% in June. However, the chairman said that the central bank will not be swayed by a month or two of data.
The lower inflation in July was welcome, but still fell short of what is required for the Fed to be sure that inflation is falling.
The Fed reiterated that its responsibility to return inflation to target is unconditional and signalled that there will almost certainly be some easing of labor conditions as well as some pain for households.
The Fed’s inflation target is at 2%.
