U.S. Federal Reserve Board Chairman Jerome Powell asks questions after the Federal Reserve raised its target interest rate three-quarters of a percentage point to curb a disruptive rise in inflation, during a conference call. press after a two-day meeting of the Federal Open Market Committee. (FOMC) in Washington, June 15, 2022.
Elizabeth Frantz | Reuters
Federal Reserve officials released forceful language on Friday to describe their focus on inflation, promising a full-blown effort to restore price stability.
In its annual monetary policy report, a forerunner of President Jerome Powell’s appearance before Congress next week, the central bank promised to make a full effort to reduce inflationary pressures at its fastest pace in more than 40 years. .
“The Committee’s commitment to restoring price stability, which is necessary to maintain a strong labor market, is unconditional,” the Fed said in a report to Congress.
This marks the Fed’s strongest statement to date, stating its commitment to continue raising interest rates and otherwise tightening policy to address the primary problem of the economy.
The statement did not explain what “unconditional” means.
Earlier this week, the Fed raised its benchmark interest rate by three-quarters of a percentage point in a new effort to curb demand. Market participants are worried that the Fed’s tightening could lead to a recession, although Powell said he still believes it can be avoided.
This rate hike came after a move in May to raise rates by half a point. This week’s move has been the most aggressive since 1994.
Along with interest rate hikes, the Fed is also reducing its $ 9 trillion balance sheet assets by allowing some of its bond yields to be reduced.
Earlier in the day, Powell himself made a similar vote, saying he and the rest of the Fed are “intensely focused” on reducing inflation.