Federal Reserve Chairman Jerome Powell proclaimed Friday that the central bank has an "unconditional" responsibility for inflation and expressed confidence that it will "get the job done." But a paper released at the same Jackson Hole, Wyoming summit where Powell spoke suggests that the Fed can't do the job itself and actually could make matters worse with aggressive interest rate increases. In the current case, inflation is being driven largely by fiscal spending in response to the Covid crisis, and simply raising interest rates won't be enough to bring it back down, researchers Francesco Bianchi of Johns Hopkins University and Leonardo [...]

Federal Reserve Chairman Jerome Powell delivered a stern commitment Friday to halting inflation, warning that he expects the central bank to continue raising interest rates in a way that will cause "some pain" to the U.S. economy. In his much-anticipated annual policy speech at Jackson Hole, Wyoming, Powell affirmed that the Fed will "use our tools forcefully" to attack inflation that is still running near its highest level in more than 40 years. Even with a series of four consecutive interest rate increases totaling 2.25 percentage points, Powell said this is "no place to stop or pause" even though benchmark rates [...]