Fed chair Powell vows to raise rates to fight inflation ‘until the job is done.

During an appearance on Thursday, Federal Reserve chair Jerome Powell emphasized the need to reduce inflation before the public becomes accustomed to higher prices and starts expecting them. Powell stressed his commitment to fighting inflation in his latest remarks, saying expectations contributed significantly to the persistence of inflation during the 1970s and 1980s. “History cautions strongly against prematurely loosening policy,” the central bank leader said in a Q&A presented by the Cato Institute, a libertarian think tank based in Washington, D.C. “I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done.”

The event was Powell’s last public appearance before the Fed’s next meeting on Sept. 20-21. Markets on Wall Street were largely unfazed by the comments, with major averages little changed in the early going. Treasury yields were mostly higher, with the two-year note, the most sensitive to Fed rate hikes, rising by nearly five basis points to 3.49%. A basis point equals 0.01 percentage points. The Fed has raised benchmark interest rates four times this year, with the fed funds rate now set between 2.25%-2.50%. Generally, markets expect the Federal Open Market Committee to increase interest rates by 0.75 percentage points this month for the third time. According to CME Group’s FedWatch tracker of fed funds futures bets, that probability increased to 86% during Powell’s remarks. Goldman Sachs and Bank of America told clients to expect that three-quarter point hike. Powell said that one reason for acting aggressively is to ensure that inflation running around its highest rate in more than 40 years doesn’t become ingrained in the public consciousness.

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