Federal Reserve Chairman Jerome Powell stated that the central bank is fully focused on bringing down high inflation to prevent it from taking root as it did in the 1970s.
Powell said today in a virtual conference, "It is our view, and my view, that we need to act now more decisively and continue until the job is done".
Mr. Powell repeated the core theme of his speech at the annual central banking symposium in Jackson Hole, Wyo., two weeks ago. He said he had chosen to deliver a "short and targeted message" at the event to emphasize the Fed's overall commitment to returning inflation to the 2% target.
Powell noted that the key lessons from the high inflation of the 1970s and the aggressive steps taken by Fed Chairman Paul Volcker in the early 1980s to lower inflation were important to avoid harming households and businesses and preventing those sectors from expecting inflation to rise.
"People have really thought of higher inflation as the norm and expected it to continue, and that's what makes it very difficult to get inflation down in that case," Powell said. He added”the longer inflation remains above target, the greater the risk that the public will begin to see higher inflation as the norm and that has the capacity to actually increase the cost of lowering inflation. "
Investors expect a 75% probability that the Fed will raise rates by another 0.75 points this month. Fed Vice Chairman Lael Brainard, a senior policy adviser to Poweel, expressed a preference for the size of the next hike, but emphasized the need for rates to rise.
