Fed governor warns inflation fight could take 'some time'

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Federal Reserve Governor Philip Jefferson said on Tuesday the U.S. central bank remains determined to combat painfully high inflation, but warned the fight to cool consumer prices could take some time. 

"We have acted boldly to address rising inflation, and we are committed to taking the further steps necessary," Jefferson said in Atlanta in his first speech since joining the U.S. central bank as a governor in May. "My colleagues and I are resolute that we will bring inflation back down to 2%."

The U.S. central bank has embarked on one of the fastest courses in history to raise borrowing costs and slow the economy

Officials in September approved a third consecutive 75 basis point rate hike, lifting the federal funds rate to a range of 3.0% to 3.25% — near restrictive levels — and indicated that more super-sized increases are coming. One basis point is one hundredth of one percent.

THE FED'S WAR ON INFLATION COULD COST 1M JOBS

Jerome Powell, chairman of the U.S. Federal Reserve, arrives to speak during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., US, on Wednesday, Sept 21, 2022. (Sarah Silbiger/Bloomberg via Getty Images / Getty Images)

Jefferson echoed that sentiment on Tuesday, saying that "inflation is elevated, and this is the problem that concerns me most." 

"Restoring price stability may take some time and will likely entail a period of below-trend growth," he said.

There is a growing expectation on Wall Street that the Federal Reserve will trigger an economic downturn as it raises interest rates at the fastest pace in three decades to catch up with runaway inflation. 

Economic growth already contracted in the first two quarters of the year, with gross domestic product — the broadest measure of goods and services produced in a nation — contracting by 1.6% in the winter and 0.6% in the spring

Fed chair Jerome Powell has all but conceded the central bank will tip the economy into a recession with its rapid rate hikes, warning that higher rates will cause economic "pain." 

The Marriner S. Eccles Federal Reserve Board Building is seen on Sept. 19, 2022 in Washington, DC. (Kevin Dietsch/Getty Images / Getty Images)

"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer," Powell told reporters in Washington. "Nonetheless, we’re committed to getting inflation back down to 2%. We think a failure to restore price stability would mean far greater pain."

New government data released last week showed that the Fed's preferred inflation gauge, known as the Personal Consumption Expenditures (PCE) index, accelerated more than expected in August, suggesting that underlying inflationary pressures remain strong. 

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The PCE index showed core prices, excluding food and energy, climbed 0.6% from the previous month and rose 4.9% on an annual basis, according to the Commerce Department.

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