On August 26, local time, Fed Chairman Powell said at the annual meeting of global central banks in Jackson Hole that the Fed will continue to raise interest rates and maintain higher interest rates for a period of time, while acknowledging that fighting inflation will bring pain to households and businesses. .

The remarks were interpreted by the market as a hawkish signal that the Fed will fight inflation at the expense of economic growth.

After Powell ended his 8-minute speech, the U.S. stock market plummeted on the day, with the Dow Jones Industrial Average falling more than 1,000 points.

Fed says it will keep raising interest rates

　　At the annual Jackson Hole annual meeting of global central banks, Powell delivered a speech on the U.S. inflation situation and monetary policy, saying that after the Fed raises interest rates to a restrictive level, it may remain for a period of time, and historical experience shows not to ease policy prematurely.

　　Powell said that the Fed's current priority is to reduce inflation to the 2% target level, and it needs to use tools to bring supply and demand into balance.

Another big rate hike by the Fed at its September monetary policy meeting may be appropriate, the magnitude of which will depend on headline economic data.

　　Powell also acknowledged that lowering inflation will likely require a period of below-trend economic growth and that labor market conditions are likely to show some weakness.

While higher interest rates, slower growth and relatively weak labor market conditions will keep inflation down, they will also cause pain for households and businesses, all of which are the price to pay for lower inflation.

But failure to restore price stability will mean more pain.

　　Some market analysts believe that Powell's latest hawkish remarks suggest the Fed will raise interest rates again sharply in September, and has suppressed some in the market that inflation has peaked and the Fed will soon reverse the direction of monetary policy.

Before Powell's speech, the three major stock indexes were roughly flat, and the market began to decline continuously after the speech, and the decline extended until the close.

　　The day's sell-off sent the major indexes off for a second straight week, essentially erasing the stock market's gains since the end of July.

As of the close, the Dow Jones Industrial Average fell 1,008.38 points, or 3.03%, to 32,283.40, the biggest one-day drop since May; the S&P 500 fell 141.46 points, or 3.37%, to 4,057.66; The main Nasdaq Composite fell 497.55 points, or 3.94%, to 12,141.71.

　　Several economists criticize the Fed

　　Criticisms of the Federal Reserve persisted during the annual meeting of central banks around the world as the Fed's rate hikes exacerbated risks to the U.S. economy.

Some economists slammed the Fed for failing to foresee the surge in inflation early, initially calling the current round of inflation "transitional" and now being forced to raise interest rates aggressively to combat inflation, posing risks to the real economy and financial markets.

　　"My personal view is that the Fed should have started raising rates as early as January, but they didn't, so we think they Behind the situation. They are behind the situation because at first they thought inflation was a transitional phenomenon, a temporary phenomenon that will eventually go away. But the Fed and its officials did not really realize the significant impact of supply chain problems, which can lead to A further rise in prices. So there are several forces at work. On the one hand the U.S. economy has a trillion-dollar fiscal stimulus, there is a lot of demand, and demand is growing at a fairly high rate; but on the other hand, because of supply chain issues , supply wasn't keeping up with demand. I do think the Fed was a little behind the curve at the time."

　　Other economists believe that the economic policies that the United States pursued out of its own needs in the past two years are at least partly responsible for this round of inflation.

First, in response to the new crown epidemic, the Federal Reserve adopted an extremely loose monetary policy, which provided a liquidity basis for high inflation; second, after the outbreak of the epidemic, the US government has successively launched multiple rounds of fiscal stimulus, resulting in excessive expansion of aggregate demand, thereby intensifying supply and demand imbalance.

　　At the same time, former U.S. Treasury Secretary Lawrence Summers said a few days ago that the Fed should send a clear signal that in order to fight inflation, a restrictive monetary policy needs to be implemented, acknowledging that the policy will increase unemployment.

Summers has repeatedly criticized the Fed for being too slow to raise interest rates and is seen as one of the Fed's most vocal critics.