Federal Reserve officials used strong language on Friday to outline their approach to inflation, promising a full-fledged effort to restore price stability.
In its annual monetary policy report — a precursor to President Jerome Powell’s appearance before Congress next week — the central bank promised it would launch a comprehensive effort to bring down inflationary pressures at their fastest rate since. over 40 years.
“The Committee’s commitment to restoring price stability — which is necessary to maintain a strong labor market — is unconditional,” the Fed said in a report to Congress.
This marks the Fed’s strongest statement to date, affirming its commitment to continue raising interest rates and tightening policy to address the economy’s overarching problem.
The statement did not specify what “unconditional” means.
Earlier this week, the Fed raised its benchmark interest rate by three-quarters of a percentage point in a further effort to slow demand. Market participants fear the Fed’s tightening could cause a recession, although Powell said he still believes it can be avoided.
The rate hike came after a decision in May to raise rates by half a point. This week’s move was the most aggressive since 1994.
Along with the rate hikes, the Fed is also reducing the assets on its balance sheet by $9 trillion by allowing some of the bond proceeds it holds to withdraw.
Earlier in the day, Powell himself made a similar vow, saying he and the rest of the Fed are “extremely focused” on bringing inflation down.
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