The Federal Reserve must act “strongly” to fight inflation “until the job is done,” Fed Chair Jerome Powell said today in his final public appearance before the Federal Open Market Committee meets Sept. 20-21. Pointing to the high inflation of the early 1980s, Powell said one reason regulators at the time failed repeatedly to fix the problem was the public had come to view high inflation as the norm.
“The longer inflation remains well above target, the greater the risk of the public does begin to see higher inflation as the norm, and that has the capacity to really raise the costs of getting inflation down,” Powell said. “So history cautions strongly against prematurely loosening policy.”
FOMC has raised the federal funds rate four times this year. Powell didn’t hint at any specific actions the committee may take when it meets again later this month but has previously said he expects it to take a “restrictive policy stance for some time.”