The Federal Reserve’s annual August retreat in Jackson Hole, Wyo., was imminent, and markets were rallying on expectations the central bank might slow its pace of interest rate increases.
Fed officials thought investors were misreading their intentions given the need to slow the economy to combat high inflation. In a widely anticipated speech, Chairman Jerome Powell decided to be blunt. He scrapped his original address, according to two people who spoke to him, and instead delivered unusually brief remarks with a simple message—the Fed would accept a recession as the price of fighting inflation.
