The stock markets in the USA were painted bright red this evening (Friday) Israel time after the American governor Jerome Powell stated that he intends to leave the interest rate at a high level until the inflation in the USA does not decrease.
The indices on Wall Street reacted with declines that intensified in the last few hours, the Nasdaq index fell by 3%, the S&P 500 fell by 2.5% and the Dow Jones shed 2.1% of its value.
In his speech, which opened the international conference of governors in Jackson Hole, Powell said that the central bank will raise the interest rate in the US as much as necessary and leave it there "for a while" to lower the high inflation that exceeds three times the target of the central bank.
Jerome Powell, photo: E.P
Employment fair in Florida, USA, photo: AFP
"Reducing inflation may require a sustained period of below-trend growth. Moreover, it is very likely that some weakening will be felt in the labor market," Powell said, adding: "Higher interest rates, slower growth and softer labor market conditions will lower inflation, but will also cause pain for households and businesses. These are the unfortunate costs of reducing inflation. But failure to restore price stability means much greater pain."
The meaning of the American governor's statement is that the USA, the largest economy in the world, is on its way to a prolonged period of slow economic growth and rising unemployment.
were we wrong
We will fix it!
If you found an error in the article, we would appreciate it if you shared it with us