News US Economy News The Balance Today: News You Need To Know on Aug. 26, 2022 Inflation Eases, But Fed Promises More Interest Rate Hikes By Kristin Myers Updated on August 26, 2022 Photo: Tom Werner / Getty Images Good news today about inflation and income comes with warnings about tougher times ahead. Federal Reserve Chair Jerome Powell said the central bank would keep raising interest rates to fight inflation “until the job is done.” In his remarks in Jackson Hole, Wyoming, Powell acknowledged that bringing down inflation was going to sting. In addition to higher unemployment, Powell said, higher interest rates will “bring some pain” to households and businesses. Powell’s speech came just as the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index from the Bureau of Economic Analysis showed that inflation is in fact retreating. The index was 6.3% higher in July than the same period last year, down from a 6.8% increase in June. Month to month, PCE actually dropped 0.1% in July from the month prior. And in good news for all of us, personal income is on the rise, jumping 0.2% last month, as workers continued to make gains. The figures, however, were lower than expected, as economists had forecasted a gain of 0.6%. But despite the fact that inflation is declining, the central bank has made it clear it won’t stop raising rates any time soon. It’s no surprise that investors didn’t love the news. Stocks tumbled this morning as Powell spoke. So what does this mean for us? It seems that we’ll have to take some of the good news with the bad. Yes inflation is dropping, which is something we can all cheer about, but bumpier times clearly lay ahead. You’ll likely hear more headlines about layoffs, and it won’t be as easy to get a job anymore. But this doesn’t mean 2008 will repeat itself all over again. People are financially better off now than they were then—which means this is a storm we will be able to weather more easily as a whole. This article originally appeared in 'The Balance Today' newsletter. You can get 'The Balance Today' delivered to your inbox daily, just sign up here. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Reserve. "Monetary Policy and Price Stability." Bureau of Economic Indicators. "Personal Income and Outlays, July 2022." MarketWatch. "This Week's Major U.S. Economic Reports & Fed Speakers."