Federal Reserve Chairman Jerome Powell pledged on Friday that he will keep raising interest rates until he is confident that inflation under control, during economic conference in Jackson Hole.
Powell acknowledged that higher borrowing costs will likely cause some short-term pain for families and businesses.
The Fed has raised rates by 2.25 percentage points since March, with an additional rate that expected to hike at the next Fed meeting in September.
“We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored,” Powell said.
Market participants have awaited Powell’s comments, searching for guidance on the extent to which policymakers will push against inflation and the criteria the central bank will refer to as it makes its decisions.
The prospect of sustained higher interest rates triggered a sharp selloff in the stock market.
Stocks started decreasing after Powell’s speech, with the Dow Jones Industrial Average erasing morning gains and ending the day down 1,008 points, or 3 percent, to 32,283; the S&P 500 plummeted 3.4 percent to 4,057, and Nasdaq 3.9 percent to 12,141 all recorded their worst day since June.
