Fed vows unconditional inflation war
The Federal Reserve, fresh from its biggest interest rate hike in more than a quarter of a century, signaled on Friday that the rising risk of recession will not stop its battle to bring down searing inflation that's punishing American households.
"The Committee's commitment to restoring price stability - which is necessary for sustaining a strong labour market - is unconditional," the Fed said in its twice-yearly monetary policy report to Congress, referring to the US central bank's rate-setting Federal Open Market Committee.
"We're attacking inflation and we're going to do all that we can to get it back down to a more normal level, which for us has got to be 2 per cent," Atlanta Fed President Raphael Bostic told American Public Media's Marketplace radio program. "We'll do whatever it takes to make that happen."
Three weeks ago, Bostic cautioned against overly rapid rate hikes and said the Fed may need to pause tightening in September to assess the economy. On Friday he said he supported this week's hefty rate increase, and that policy needs to be "more muscular."
Inflation, measured by the Personal Consumption Expenditures Price Index, is running at more than three times the Fed's 2 per cent target. The central bank on Wednesday raised the range for its policy rate by 75 basis points to 1.50 per cent-1.75 per cent and published forecasts showing most policymakers support lifting borrowing costs further this year to perhaps 3.4 per cent, and higher in 2023.
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