US stocks fell sharply, Friday, following Federal Reserve Chairman Jerome Powell said in a Jackson Hole speech that the central bank will not back down in its fight once morest rapid inflation.
The Dow Jones index fell 1000 points, or 3.03%, to 32283.40 points, following losses accelerated until the close. The Standard & Poor’s index fell 3.37% to 4057.66 points, and the Nasdaq fell 3.94% to 12141.71 points.
The major averages fell for the second week. The Dow Jones fell 4.2% on a weekly basis, while the S&P and Nasdaq lost nearly 4% and 4.4%, respectively.
Powell made a firm commitment on Friday to halt inflation, warning that he expected the central bank to continue raising interest rates in a way that would cause “some pain” for the US economy.
In his much-anticipated annual policy address at Jackson Hole, Powell emphasized that the Federal Reserve would “use its tools aggressively” to combat inflation, which is still near its highest levels in more than 40 years.
Even with a series of four consecutive interest rate increases totaling 2.25 percentage points, Powell said the increase would continue even though benchmark rates might be around an area that is neither stimulating nor restrictive of growth.
“While high interest rates, slow growth, and weak labor market conditions will bring inflation down, they will cause some pain for households and businesses,” Powell said. These are the unfortunate costs of lowering inflation, but failure to restore price stability will mean much more pain.”
These comments come amid signs that inflation may have peaked but there are no noticeable signs of abating.
Powell added that restoring price stability is likely to require maintaining a restrained political stance for some time, as the historical record strongly cautions once morest premature economic easing.
