š¢ Fed Jackson Hole preview: Powell to stress a recession won’t stop Fed’s fight against high inflation š¢
No jawboning of financial markets expected
Federal Reserve Chairman Jerome Powell will use his closely-watched Jackson Hole speech this week to stress that the central bank is going to bring down the high U.S. inflation rate even if it means a recession, economists said.
āThe core message will be the Fedās dogged determination to bring inflation down even though they know theyāll be running substantial risks of a weaker short-term growth outlook than they would like,ā said Lou Crandall, chief economist of Wrightson ICAP.
The minutes of the Fedās July meeting released last Wednesday made this point, but it was lost in other headlines about the eventual slowing of the pace of interest rate hikes, Crandall said.
According to the minutes, Fed officials ārecognized that policy firming could slow the pace of economic growth, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.ā
Crandall said that a Powell speech is a better place to deliver a message than the minutes and the determination to hold the line in the face of a weak economy and weak labor market will be āfront and center,ā he said.
āInflation has gotten to the point where they have no choice but to accept that risk,ā Crandall added.
Powell is scheduled to speak from Jackson Hole, Wyo., on Friday at 10 a.m. Eastern.
U.S. consumer price inflation is running at an 8.5% annual rate in July, well above the Fedās 2% target.
Concerns about an imminent recession have eased with the strong July jobs report and signs that the consumer is still spending.
https://www.marketwatch.com/story/powell-to-tell-jackson-hole-that-recession-wont-stop-feds-fight-against-high-inflation-11660925902