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Fed Chair Powell Signals Interest Rates to Remain High to Fight Inflation


Jerome H. Powell, the Federal Reserve chair, signaled on Thursday that the central bank will proceed raising rates of interest to persuade the American public that it’s serious about bringing soaring price growth back to normal levels, further cementing market expectations of one other aggressive rate increase this month.

“The longer inflation stays well above goal, the greater the chance that the general public sees higher inflation because the norm,” Mr. Powell said in a moderated discussion with Peter H. Goettler, the president and chief executive of the Cato Institute in Washington. “History cautions strongly against prematurely loosening policy.”

Mr. Powell has taken a hawkish tone in recent appearances, looking for to underscore the Fed’s firm commitment to bringing down inflation. In a speech in Jackson, Wyo., last month, he signaled that the Fed would proceed to lift rates of interest — and keep them higher for an prolonged period — to chill price pressures.

“Restoring price stability will take a while and requires using our tools forcefully to bring demand and provide into higher balance,” Mr. Powell said in those remarks. “While higher rates of interest, slower growth and softer labor market conditions will bring down inflation, they can even bring some pain to households and businesses.”

Mr. Powell explained the rationale behind last month’s speech, which was shorter and more direct than previous remarks on the annual Jackson Hole economic conference. “The message really was the Fed has, and accepts, responsibility for price stability,” he said.

“I can assure you that my colleagues and I are firmly committed to this project,” Mr. Powell added, “and we’ll keep at it until the job is finished.”

Other Fed officials have echoed his resolve in recent weeks, raising market expectations that the central bank will again raise rates by three-quarters of a percentage point at its next meeting, on Sept. 21-22.

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