Home » Top central bankers deliver aggressive message at Jackson Hole

Top central bankers deliver aggressive message at Jackson Hole

by archyde

The world’s top central bankers sent a stern and unified message on the need to curb inflation, declaring in Jackson Hole that it is broad-based, here to stay and will require their decisive action.

The heads of the Bank of England, the Swiss National Bank, the Bank of Japan, the Bank of Korea and several European Central Bank policymakers spoke Saturday at the annual Kansas City Fed retreat at Grand Teton National Park in Wyoming.

His remarks follow comments from Fed Chairman Jerome Powell on Friday, which sought to unequivocally commit the US central bank to raising interest rates until inflation slows significantly.

Policymakers in Europe and the US, battling the highest inflation in decades, are raising rates with determination and rejecting suggestions they will falter if their economies falter while price pressures remain too high. .

The meeting in Jackson Hole, the first in person since the pandemic spread in 2020, was a platform to convince investors that they would go ahead even if it caused them pain.

Isabel Schnabel, member of the Executive Board of the ECB, the most anticipated speaker of the day, urged her colleagues to act decisively to curb price increases that are approaching 10% in Europe and exceeding 8% in the US.

“Both the probability and the cost of the current high inflation becoming entrenched in expectations are uncomfortably high,” Schnabel said. “In this environment, central banks must act forcefully. They need to brace themselves resolutely against the risk of people beginning to doubt the long-term stability of our fiat currencies.”

He also acknowledged that there was a risk of a recession, but told his fellow politicians that “even if we do go into a recession, we basically have little choice but to continue down our path of normalization,” concurring with Powell’s remarks the day before that “reducing inflation is likely to require a sustained period of below-trend growth.

ECB officials are debating what size interest rate increase may be appropriate at their September meeting, with some arguing that a 75 basis point increase should be at least part of the discussion. The Governing Council in July raised rates by half a percentage point.

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