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Powell Reiterates Commitment To Aggressively Fighting Inflation

jerome h powell 112818 08sep22 lt

Federal Reserve Chair Jerome Powell reiterated the central bank's commitment to aggressively fighting inflation during remarks at the Cato Institute's 40th Annual Monetary Conference on Thursday.

"We need to act now, forthrightly, strongly as we have been doing," Powell told the moderator during a Q&A session at the libertarian think-tank based in Washington, D.C. "And we have to keep at it until the job is done."

Powell also once again warned about the dangers of allowing elevated prices to become entrenched, noting the Fed has a "responsibility" to bring inflation back down to 2 percent.

"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 said.

The Fed chief's tone was similar to the speech he delivered at last month's Jackson Hole economic symposium, which helped trigger a recent sell-off on Wall Street.

Powell's comments are seen as reinforcing expectations that the Fed will raise interest rates by another 75 basis points at its next meeting later this month.

CME Group's FedWatch Tool currently indicates an 86.0 percent chance of a 75 basis point rate hike at the September 20-21 meeting and just a 14.0 percent chance of a 50 basis point rate hike.

The Fed has aggressively raised interest rates from near-zero levels to 2.25-2.50 percent over the past four meetings, including 75 basis point increases in June and July, which marked the biggest rate hikes since 1994.

While the Fed originally described pandemic-driven inflation as "transitory," the central bank eventually decided to act in March as consumer price growth reached 40-year highs.

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