US Federal Reserve Chair Jerome Powell warning that there could be some “pain” as the central bank intensifies measures to tame inflation spooked investors, sending the American stocks into a tailspin. Powell spoke for eight minutes during his keynote address at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming, as per Bloomberg.
The US Fed chair made it clear in his speech that the central bank will keep raising interest rates to rein in inflation.
The US Fed has been on an aggressive campaign to raise interest rates and Powell’s speech at the Jackson Hole gathering of global monetary policymakers said that its fight against inflation is far from over, dashing Wall Street’s hopes that the central bank may soon ease up on high interest rates.
Reacting to Powell’s hawkish tone, all three US stock indices – Dow Jones, S&P and Nasdaq — slumped three percent or more on Friday. In the span of just eight minutes, Powell’s speech sparked a market rout that slashed the fortunes of US billionaires’ by $78 billion, as per Bloomberg.
World’s richest man and Tesla Chief Elon Musk’s fortune declined by $5.5 billion with his total net worth standing at $254 billion as of August 27, 2022, whereas the second richest Jeff Bezos lost $6.8 billion on the Bloomberg Billionaires Index, a to-tal loss of around $12 billion from the top two billionaires’ fortunes.
Meanwhile, Bill Gates and Warren Buffett’s wealth declined by $2.2 billion and $2.7 billion, respectively, while Sergey Brin’s fortune dropped below $100 billion, as per the Bloomberg data. The Bloomberg Billionaires Index is a daily ranking of the world’s richest people. The figures are updated at the close of every trading day in New York.
Taming high US inflation will inflict “pain” on American families and businesses, but failure to wrestle prices down from their current 40-year high would be even more harmful, Powell said Friday in a hotly-anticipated speech to global policymakers.
Addressing the annual gathering of central bankers in Jackson Hole, Wyoming, Powell did not hold back or leave room for doubt about the central bank’s course, pledging to act “forcefully.”
He warned the world’s largest economy is likely to slow for a sustained period, and the strong US job market will suffer in order to get prices down — which he called the “unfortunate costs of reducing inflation.”
