Federal Reserve

Fed promises 'unconditional' approach to taking down inflation in report to Congress

Key Points
  • Fed officials rolled out strong language Friday to describe their approach to inflation, promising 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.
U.S. Federal Reserve Board Chairman Jerome Powell takes questions after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, June 15, 2022.
Elizabeth Frantz | Reuters

Federal Reserve officials rolled out strong language Friday to describe their approach to inflation, promising a full-fledged effort to restore price stability.

In its semiannual report on monetary policy – a precursor to Chairman Jerome Powell's appearance before Congress next week – the central bank promised it would launch a full effort to bring down inflation pressures running at their fastest pace in more than 40 years.

"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.

That marks the Fed's strongest statement yet, affirming its commitment to continue raising interest rates and otherwise tightening policy to solve the economy's paramount issue.

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The statement did not elaborate on what "unconditional" means.

Earlier this week, the Fed raised its benchmark interest rate three quarters of a percentage point in a further effort to slow demand. Market participants worry that the Fed tightening could bring on a recession, though Powell said he still thinks that can be avoided.

That rate hike came after a move in May to raise rates by half a point. This week's move was the most aggressive since 1994.

Along with rate hikes, the Fed also is reducing assets from its $9 trillion balance sheet by allowing some proceeds from bonds it holds to roll off.

Earlier in the day, Powell himself made a similar vow, saying he and the rest of the Fed are "acutely focused" on bringing down inflation.

Correction: The comments from Fed officials were in the central bank's semiannual report on monetary policy. An earlier version misstated the timing.