Övünç Kutlu
09 September 2022•Update: 09 September 2022
ANKARA
US Federal Reserve Chairman Jerome Powell said the central bank is committed to continue raising interest rates until inflation comes down.
"The Fed has the responsibility for price stability, by which we mean 2% inflation over time," Powell said Thursday at Washington, D.C.-based think tank Cato Institute.
"The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down," he added.
The Fed raising its benchmark interest rate by a total of 225 basis points since March has partially helped inflation down, but it is still far away from the Fed's target of 2%.
Annual consumer inflation rose 8.5% in July, easing from the 9.1% annual gain in June, while producer prices rose 9.8% in July annually, slowing from an 11.3% gain in June.
"History cautions strongly against prematurely loosening policy... I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done," Powell said.
Fed Vice Chair Lael Brainard said on Wednesday the rate hikes will continue "as long as it takes" in order to get inflation down.
"So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further," she told at the Clearing House and Bank Policy Institute 2022 Annual Conference held in New York.
"High inflation imposes costs on all households, and especially low-income households. The multiple waves of the pandemic, combined with Russia's war against Ukraine, unleashed a series of supply shocks hitting goods, labor, and commodities that, in combination with strong demand, have contributed to ongoing high inflation," she explained.
Brainard said moving the Fed's monetary policy to a restrictive stance should put downward pressure on demand, while improvements in supply conditions should also help reduce price pressures in goods.
