Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.
NewsUSA News

Fed’s Powell says inflation is still too high

[ad_1]

Inflation remains too high amid a surprisingly strong U.S. economy, driven by consumer spending and a resilient labor market that has kept wages high, Federal Reserve Chairman Jerome Powell said Thursday .

Speaking at the Economic Club of New York, Powell said higher rates instituted by policymakers are impacting some sectors of the economy, such as housing, and that progress has been made in the fight against the central bank against the surge in prices.

He said there had been encouraging inflation trends over the summer and over the past three to six months it had remained below 3%, closer to the target of 2% from the Fed.

“These short-term measures are often volatile,” Powell said. “Either way, inflation is still too high, and a few months of good data is just the start of what it will take to build confidence that inflation is falling sustainably toward our goal. “

Federal Reserve Chairman Jerome Powell speaks during a luncheon hosted by the Economic Club of New York at the Hilton Hotel on October 19, 2023 in New York. Powell said inflation was still too high and interest rates may have to stay high for longer.
SPENCER PLATT/GETTY IMAGES

Powell was also keen to send the message that interest rates are likely to stay high for longer.

“The policy stance is restrictive, meaning that restrictive policy puts downward pressure on economic activity and inflation. Given the rapid pace of tightening, there could still be significant tightening underway “, did he declare.

Starting in March 2022, Fed policymakers aggressively raised rates to curb historic inflation levels. In June of that year, personal consumption expenditures, the measure of inflation that the central bank watches closely, reached a peak of 7.1 percent. That figure fell to 3.5 percent through September, and core PCE, which excludes the volatile food and energy sectors, fell to 3.7 percent from a peak of 5. 6 percent in February last year.

Rate hikes have rippled through the economy, increasing the cost of borrowing for real estate, autos and business investments. But recent indicators also show that Americans continue to spend, even as they operate in an environment of high interest rates and soaring prices.

Powell said that after 2022’s aggressive rate hikes, the central bank took a more thoughtful approach this year to allow increases to pass through the economy. The objective remains to bring inflation to target.

“You know, we moved very quickly into 2022 to catch up and now we’re moving cautiously through these decisions,” he said. “Our problem right now is trying to adopt a policy that is restrictive enough to bring inflation down to 2% over time.”

Although the economy has remained resilient, there are signs that the labor market is cooling, with job postings only slightly higher than pre-COVID-19 levels.

“Indicators of wage growth show a gradual decline toward levels that would be consistent with 2 percent inflation over time,” Powell said.

He was satisfied that the policies had slowed inflation without causing too much harm to the labor market and economic activity.

“Economic growth has consistently surprised to the upside this year, as recently shown by strong retail sales data released earlier this week,” he said.

But he added that it might be difficult to reach the 2 percent inflation target.

“The results suggest that a sustainable return to our 2% inflation target will likely require a period of below-trend growth and a further easing of labor market conditions,” he said.

He said policymakers would balance risks to ensure the path to 2 percent was definitive. He added that they did not want to do too little, which could perpetuate the high inflation environment for longer. This could force the Fed to take even more aggressive policy actions, which could come at a cost to the economy and jobs.

“My colleagues and I are determined to adopt a policy restrictive enough to bring inflation sustainably to 2% over time, and to maintain a restrictive policy until we are satisfied that inflation is on the right track to achieve this goal,” he said. .

He said he was aware that doing too much now could cause what he described as unnecessary harm to the economy. Going forward, the Fed will work to balance risks and watch how the economy responds.

“Given the uncertainties and risks, and the path we have traveled, the committee is moving forward cautiously,” he said.

[ad_2]

USA News Gb2

Back to top button