Federal Reserve Chairman Jerome Powell said “households and businesses are hurting a bit” as interest rates rise.
Prepare for rising interest rates.
That’s the message Federal Reserve Chairman Jerome Powell sent to Americans on Friday.
“While higher interest rates, slower growth and looser labor market conditions will reduce inflation, they will also hurt households and businesses,” Powell said. “These are the unfortunate costs of reducing inflation.”
His remarks in Jackson Hole, Wyoming came shortly after the release of a federal index called the PCE report. It shows inflation at 6.3% in July, compared to 6.8% in June. But this progress is not enough for the Fed.
“While the weaker inflation readings for July are certainly welcome, the single-month improvement is well below what the committee will need to see before we are confident inflation is coming down,” he said. Powell.
The PCE report, which is the Fed’s preferred measure of inflation, came two weeks after the consumer price index also showed a drop in inflation. But both are still far from the Fed’s 2% target rate.
In September, Fed officials will meet again and likely announce another rate hike in an effort to cool demand for goods and services and keep prices lower.