Fed Chair is Freaking Out About Inflation Being “Too High”
Jose Nino
|
On August 25, 2023, Federal Reserve Chair Jay Powell warned that inflation “remains too high” during a speech he gave at the Fed’s annual economic symposium in Jackson Hole, Wyoming.
His comments now increase the prospects of additional interest rate hikes in the US as inflation continues climbing upwards. Powell’s speech had a hawkish undertone with him signaling the central bank’s willingness to keep a “restrictive” policy to have inflation drop to its 2% target rate.
“Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell declared at the Fed symposium. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” he continued.
However, he did soften his message with a promise to move “carefully” as the Fed goes through final stages of its drive to contain the most significant inflation surge in decades. Powell said the Fed was currently focused not only on the risk of constraining monetary policy too little and letting inflation grow rampant but also increasing interest rates too high. “Doing too much could also do unnecessary harm to the economy,” he stated.
The conundrum the Fed is facing demonstrates the pitfalls of fiat money. When such a centralized entity can manipulate interest rates and increase the money supply, one can only expect economic instability to ensue. No amount of interest rate tinkering will prevent such economic dislocations.
Ultimately, it will require the abolition of the Fed and the introduction of a system of competing currencies in order for the US’s monetary affairs to be fully sorted out.
Share: