Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022.

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WASHINGTON, Aug 26 (Reuters Breakingviews) - Jerome Powell chose not to mince words at this years Jackson Hole central bank summit. The U.S. Federal Reserve chair on Friday said the central bank would do what it takes to tame inflation, even if its painful for the economy. Thats a tough message that investors, who have been searching for dovishness, needed to hear. Theyre not the only ones he has to convince.

In a speech half as long as the one he gave last year, Powell said the Feds fight against price surges will take some time, which could slow job growth. But thats necessary, he argued, to bring prices down. Curbing rate hikes prematurely would be a mistake. That last part was clearly directed at investors. In July, even as the Fed raised rates by 75 basis points, markets rose after Powell said the pace of tightening would slow at some point. On Friday when his speech was released, the S&P 500 index fell slightly.

Now consumers and businesses need to get the message too. While American spending on goods and services slowed in July, consumption has been resilient. Retail sales unexpectedly rose 0.6% last month on an inflation-adjusted basis as declining gasoline prices left more money for other things.

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Thats a problem for the Fed. The personal consumption expenditures index, the Feds preferred measure of inflation, rose at a slower 6.3% year-over-year in July and fell 0.1% from June. While consumers own projections of inflation are declining, according to a New York Fed survey, that may not hold if spending, and corporate hiring, stays as strong as it has been lately. Powells claim that inflation expectations are well anchored is backed by surveys, but its also something thats hard to measure definitively, and can change quickly.

When Powell took on leadership of the central bank in 2018, he vowed to speak in plain English to make the institution more accessible to ordinary people. He is doing that. But his success in fighting inflation will depend on whether the message hits home outside of the world of finance and markets.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

Federal Reserve Chair Jerome Powell said on Aug. 26 that the U.S. central bank will work to bring inflation down until the job is done. He made his comments during the annual Jackson Hole, Wyoming central bank conference.

The theme for the 2022 gathering, hosted by the Kansas City Federal Reserve Bank, is "Reassessing Constraints on the Economy and Policy."

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Editing by John Foley and Sharon Lam

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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Breakingviews - Powell gives markets tough medicine they needed - Reuters