Jerome Powell delivered a tough message: Inflation is way too high, and the Federal Reserve is laser-focused on taming it with higher borrowing costs. — The Associated Press
WASHINGTON — Jerome Powell delivered a tough message at the start of a news conference Wednesday: Inflation is way too high, and the Federal Reserve is laser-focused on taming it with higher borrowing costs.
“There were some hints that we’re closer to the end than the beginning” of the Fed’s efforts to tighten credit, said Michael Feroli, an economist at JPMorgan Chase and a former Fed staffer. When asked at his news conference whether a recession would alter the Fed’s course of rate hikes, Powell said simply, “We’re going to be focused on getting inflation back down.”
“It doesn’t make sense that the economy could be in recession with this kind of thing happening,” the Fed chair said.On Thursday, the government will estimate second-quarter gross domestic product, the broadest measure of the nation’s output of goods and services. Some economists think the GDP report will show that the economy contracted for a second straight quarter, which would meet an informal definition of recession.
The Fed chair did sound a cautionary note, pointing out that there are signs that momentum in the job market is easing. Job openings have declined modestly, more people are seeking unemployment aid and hiring is lower than it was at the start of the year.But even those signs of a slightly weaker job market are not all bad news, at least from the Fed’s perspective.
In June officials projected that the Fed’s key rate would reach between 3.25% and 3.5% at the end of this year, which Powell said was a “moderately restrictive” level. And at least two additional rate hikes were forecast for next year.
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