US Federal Reserve Board Chairman Jerome Powell asked questions after the Federal Reserve raised its target interest rate by three-fourths of a quarter to stop the devastating jump in inflation during a press conference after a two-day meeting of the Federal Open Market Committee ( FOMC) in Washington, DC, June 15, 2022.
Elizabeth Franz Reuters
Federal Reserve officials spoke strongly on Friday to describe their approach to inflation, promising full efforts to restore price stability.
In its annual monetary policy report, a precursor to President Jerome Powell’s speech to Congress next week, the central bank vowed to make every effort to reduce the fastest-growing inflationary pressures in more than 40 years.
“The commitment of the Committee on Restoration of Price Stability, which is needed to maintain a strong labor market, is unconditional,” the Fed said in a report to Congress.
This is the strongest statement of the Fed so far, confirming its commitment to continue to raise interest rates and otherwise tighten policy to solve the primary problem of the economy.
The statement did not specify what “unconditional” means.
Earlier this week, the Fed raised its key interest rate by three-quarters of a percentage point in a further effort to slow demand. Market participants are worried that the Fed’s tightening could lead to a recession, although Powell said he still believes this can be avoided.
This increase in interest rates 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 raising interest rates, the Fed is also reducing its balance sheet assets by $ 9 trillion, allowing some of the bond proceeds it holds to shrink.
Earlier in the day, Powell himself made a similar vow, saying he and the rest of the Fed were “sharply focused” on reducing inflation.