The world’s leading central bankers issued a tough and unified message about the need to curb inflation, declaring at Jackson Hole that it has broad bases and will need to stay here and take strong action.
Several policymakers from the Bank of England, the Swiss National Bank, the Bank of Japan, the Bank of Korea and the European Central Bank spoke Saturday at the Kansas City Fed’s annual retreat in Grand Teton National Park in Wyoming.
Their statement follows remarks by Fed Chairman Jerome Powell on Friday that he tried to get the U.S. central bank to explicitly commit to raising interest rates until inflation slows significantly.
European and U.S. policymakers are battling the hottest inflation in decades, are resolutely raising interest rates and rejecting proposals to falter if the economy falters while price pressures are too high. .
The Jackson Hole rally, the first in-person since the pandemic unfolded in 2020, was a platform for convincing investors to stick with it, even if it caused pain. .
ECB Governing Council member Isabel Schnabel, the day’s most anticipated speaker, urged colleagues to act with determination to slow price increases, which are approaching 10% in Europe and above 8% in the United States. urged to “Both the likelihood and the cost of the current high inflation entrenching expectations are uncomfortably high,” Schnabel said. “In this environment, central banks need to act strongly. They need to lean resolutely against the risk that people will doubt the long-term stability of fiat currencies.”
She also acknowledged the risk of a recession, but told fellow policymakers, “Even if we do enter a recession, we basically have little choice but to continue the path of normalization. “It will likely require a period of sustained below-trend growth.”
ECB officials debated the size of an appropriate rate hike at their September meeting, with some arguing that at least a 75 basis point hike should be part of the discussion.
Swiss National Bank Governor Thomas Jordan said structural factors in the economy could keep inflation high in the coming years, and that it would be more widespread.