Federal Reserve Head Jerome Powell reiterated the central bank’s commitment to tackle inflation, since it is essential for the global financial system.
“The Federal Reserve’s strong commitment to our price stability mandate contributes to the widespread confidence in the dollar as a store of value. To that end, my colleagues and I are acutely focused on returning inflation to our 2 percent objective,” Powell said in a Fed-sponsored conference, as reported by CNBC.
Powell’s remarks came after the Fed increased the benchmark interest rate by three-quarters of a percentage point, to a targeted range of 1.5%-1.75%. This was the greatest hike since 1994 that confirmed the Fed’s aggressive move to fight inflation levels not seen in four decades.
Consumer price index in May posted an 8.6% increase over the past year and the Fed’s goal is to return to a range of 2%. The Central Bank’s decision is also keeping investors worried on the impact on credit cards, home equity loans and auto financing.
“Meeting our dual mandate also depends on maintaining financial stability,” Powell said. “The Fed’s commitment to both our dual mandate and financial stability encourages the international community to hold and use dollars.”
Also, on Friday Fed officials promised a full-fledged effort to restore price stability.
“The Committee’s commitment to restoring price stability — which is necessary for sustaining a strong labor market — is unconditional,” the Fed said in a report to Congress.