Powell’s prognosis… The #flationary fight ain’t over. On Friday, Fed chair Jerome Powell said he plans to keep hiking interest rates until inflation’s under control — which could take a while. The news disappointed some investors, who hoped rates had peaked after inflation cooled last month. Powell acknowledged “pain” ahead. Markets responded accordingly:
Bitter pill… Powell’s ready to make sacrifices. His statement disappointed investors but was no surprise. For months JPow’s said he’ll keep fighting inflation till it sinks to near the Fed’s target of 2% — even if it means some economic pain. Last Friday he doubled down. Now he expects:
No pain, no gain… Powell’s prescription may hurt now, but a temporary slowdown is better for markets and consumers than spiraling inflation. The medicine appears to be helping Americans already: real disposable income rose in July after falling for months. But painful side effects include slumping stocks and increasing layoffs. Despite that, jobs have (so far) been resilient. August hiring data comes out Friday.