Fed Chair Powell: 'We are navigating by the stars under cloudy skies' 🌌

The central bank will 'proceed carefully' as it works to get inflation down 🎈

Fed Chair Jerome Powell speaks at the Jackson Hole Economic Policy Symposium. (Source: YouTube / KansasCityFed)

Federal Reserve Chair Jerome Powell reiterated the central bank’s commitment to getting inflation down, specifying that the central bank would “proceed carefully.”

“Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said at the Jackson Hole Economic Policy Symposium on Friday. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.“

Powell wasn’t nearly as hawkish as it was last year when he said economic “pain” stemming from tighter monetary policy would be the cost of reducing inflation.

For more on Powell and “pain,” read: TKer's 2022 word of the year: 'Pain' 🥊

This shift in tone makes sense as the annual inflation rate as measured by the consumer price index was an alarming 8.5% a year ago. Today, it’s a much cooler 3.2%.

The consumer price index’s growth rate has come way down in the past year. (Source: @M_McDonough)

As measures of inflation have cooled over the past year, Powell and the Fed have been dialing back their hawkish tone. On February 1, Powell acknowledged that “for the first time that the disinflationary process has started.“ At its June 14 policy meeting, the Fed kept rates unchanged, ending a streak of 10 consecutive rate hikes. And while the central bank lifted rates again on July 26, most economists agree that the final rate hike of the cycle is near.

“Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” Powell said.