Powell vows that the Fed is ‘acutely focused’ on bringing down inflation

Federal Reserve Board Chairman Jerome Powell speaks to reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., June 15, 2022.

Powell said Friday that bringing down inflation is important for the global financial system.

The dollar is seen as a store of value because of the Federal Reserve's price stability mandate. Powell said that he and his colleagues were focused on returning inflation to the Fed's 2 percent objective.

The Federal Open Market Committee voted on Tuesday to raise benchmark interest rates by three-quarters of a percentage point. Banks use the rate to set borrowing costs for short-term loans they give to each other, but it also feeds through to a variety of consumer products.

The consumer price index in May was 8.6% higher than it was a year ago.

Fed officials aim 2% inflation as healthy for a growing economy and will continue raising rates until prices return to that range.

While inflation hurts consumers through the prices they pay at the grocery store and gas pump, Powell focused on its global financial importance.

Maintaining financial stability is one of the things that needs to be done to meet our dual mandate. The international community is encouraged to hold and use dollars because of the Fed's commitment.

Maintaining full employment is one of the responsibilities of the Fed.

The importance of the dollar in global financing was cited by Powell as one of the reasons why the Fed put in place vehicles to lend the dollar to global central banks.

Changes in the global financial system include the use of digital currencies and payments systems like FedNow.

The dollar could be supported as the world's reserve currency by a digital currency.

The international role of the dollar in the future could be affected by rapid changes in the global monetary system.