Lowering inflation will ‘bring some pain’ to Americans through lost jobs and smaller raises, Powell says
The Federal Reserve is pushing forward in its fight to cool inflation, but the path ahead won't come without some economic discomfort for Americans.
Yet the next phase of policy tightening"will also bring some pain to households and businesses," Powell said. Higher rates slow price growth by lifting borrowing costs and weakening demand. That shows up in the form of higher mortgage rates, pricier loans, more expensive credit-card debt. That will slow overall economic growth and weigh on the job market into 2023. As spending wanes, companies will be more likely to cut jobs and issue smaller raises to workers.
Powell's remarks weren't entirely hawkish. He noted that, as the Fed lifts rates to restrictive levels, it will likely become appropriate"to slow the pace of increases." With the last two hikes tripling the size of the central bank's typical quarter-point rate increase, there's plenty of room for the Fed to slow its roll.
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