Uday Kotak, Chief Executive Officer, Kotak Mahindra Bank on Monday said US Federal Reserve Chairman Jerome Powell’s ‘firm’ stance to fight inflation reminds him of the former chair of the US central bank Paul Volcker, who turned around inflation in the 70s/80s.
“Federal Reserve Chairman Powell finally spoke firmly to fight inflation. Reminds us of Paul Volcker who broke the back of US inflation in 70s/80s. Watch out for Quantitative Tightening ( QT). US rules the financial world. Opiated markets will wake up and smell the coffee!” he said in a tweet.
Volcker was the 12th chair of the Federal Reserve from 1979 to 1987. During his tenure, he was widely credited with having ended the high levels of inflation seen in the US throughout the 1970s and early 1980s.
Kotak’s statement comes days after Powell delivered a stark message on Friday indicating the Fed will likely impose more large interest rate hikes in the coming months and is resolutely focused on taming the highest inflation in four decades.
Fed's Powell, on Friday, said the US economy will need tight monetary policy "for some time" before inflation is under control.
Tight monetary policy "for some time" means slower growth, a weaker job market and "some pain" for households and businesses, he said in a speech to the central banking conference in Jackson Hole, Wyoming.
"Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions," Powell said.
Fed chair did not hint at what the central bank might do at its upcoming September 20-21 policy meeting. However, according to news agency Reuters, officials are expected to approve either a 50- or 75-basis-point rate increase.
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