Fed chair Powell warns inflation battle may be painful. Job losses and slower growth – „unfortunate costs”.

Federal Reserve Chairman Jerome Powell said on Friday that the Fed must continue raising interest rates and hold them at a higher level until it is confident that inflation is under control. Powell emphasized that the Fed’s policy moves have not been enough to achieve that goal so far. 

The Federal Reserve  struggles to bring down inflation from a 40-year high. Powell said the Fed’s “overarching focus right now is to bring inflation back down”.

The Federal Reserve has been raising interest rates rapidly in an attempt to slow inflation. Powell said the Fed would continue to use its tools “forcefully” until prices were under control. “We must keep at it until the job is done,” said Powell.

Powell warned there would be „unfortunate costs” to these actions, namely job losses and slower growth.

“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell said in a speech at the Kansas City Fed’s annual symposium in Wyoming. “Those are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

The Dow Jones Industrial Average lost just over 1,000 points, 3%, the S&P fell 3.3% and the Nasdaq dropped almost 4%.