Federal Reserve Chairman Jerome Powell will use his closely-watched Jackson Hole speech this week to stress that the central bank is going to bring down the high U.S. inflation rate even if it means a recession, economists said. “The core message will be the Fed’s dogged determination to bring inflation down even though they know they’ll be running substantial risks of a weaker short-term growth outlook than they would like,” said Lou Crandall, chief economist of Wrightson ICAP.
The minutes of the Fed’s July meeting released last Wednesday made this point, but it was lost in other headlines about the eventual slowing of the pace of interest rate hikes, Crandall said. According to the minutes, Fed officials “recognized that policy firming could slowthe pace of economic growth, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.” See: Federal Reserve officials back moving interest rates higher in order to slow the economy, minutes show Crandall said that a Powell speech is a better place to deliver a message than the minutes and the determination to hold the line in the face of a weak economy and weak labor market will be “front and center,” he said. “Inflation has gotten to the point where they have no choice but to accept that risk,” Crandall added. Powell is scheduled to speak from Jackson Hole, Wyo., on Friday at …