Inflation is too high, but there is a way to lower it by maintaining a strong labor market, said Jerome Powell, president of the US central bank, quoted by France Presse. According to him, the American economy is not in recession, BTA reported.
Our goal is to lower inflation and achieve a so-called “soft landing,” that is, without a significant increase in unemployment, Powell noted after the end of the two-day monetary policy meeting of the US Federal Reserve Board last night. The Federal Reserve sharply raised its key interest rate again in an attempt to rein in unrelenting inflation.
The Monetary Policy Committee raised the key rate by three-quarters of a percentage point (0.75 percentage point), as markets had expected, to a range of 2.25-2.50 percent. Jerome Powell admitted that the latest inflation reading of 9.1 percent in June, a new record for more than 40 years, was even worse than the expectations of IMF members.
It was the fourth straight US rate hike since the start of the year: a quarter of a percentage point in March, half a percentage point in May and three quarters of a percentage point in June – the biggest since 1994. Powell hinted that an “unusually high” increase may be needed at the next meeting in September.
The UFR usually raises the interest rate by a quarter of a percentage point. The International Monetary Fund (IMF) is not so optimistic. The current situation suggests that the possibility of the US avoiding a recession is not great, Chief Economist Pierre-Olivier Gurinchas warned on Tuesday. The Washington institution significantly lowered its forecast for the growth of the American economy in 2022 and expects it to be only 2.3 percent.
When asked why the UFR was so slow to react to the price increase, Powell defended himself by saying that the situation had developed in a way that everyone had not expected. According to him, it is not certain whether it would have been different if the UFR had raised the interest rate earlier. The first data on US gross domestic product for the second quarter is due later today, and is expected to be slightly more positive after the contraction in the first quarter (-1.6 percent), notes AFP.
Place a rating:
☆
☆
☆
☆
☆
–
5
Assessment 5 from 1 voice.
–
– –
