US Fed Governor Warns of Widespread Inflation in the Economy

A governor of the American central bank (Fed), Lisa Cook, warned on Friday of inflation “generalized in the economy” in the United States, and stressed that the road to a low and stable rise in prices could be long and difficult. jolts.

The various measures used to calculate inflation “have passed their peaks but remain elevated, suggesting that inflation has become widespread in the economy,” Lisa Cook said in a speech at Georgetown University, Washington. .

Inflation in the United States slowed to 5% year on year in March, the lowest in almost two years, according to the CPI index published last week. A figure still too high compared to the Fed’s 2% target.

The institution favors another measure, the PCE index, whose figures for March will be published on April 28. The governor anticipates a figure slightly above 4%.

“The big question, however, is whether, and how quickly, inflation will continue on its downward path towards our 2% target,” she continued.

“So far, most of the decline has been due to moderating energy prices,” she said, adding that “the path back to our low and stable inflation target could be long and probably uneven and bumpy”.

To curb inflation, the Fed has been raising its key rate since March, which is pushing commercial banks to offer their customers credit at higher rates, in order to slow down consumption and, ultimately, to ease the price pressure.

The next Fed meeting will be May 2-3. Rates are currently in a 4.75-5.00% range, the highest since 2007, and most market participants are pricing in another quarter-point hike, according to CME’s valuation. Group.

The cumulative effects of the rate hikes already made and the tightening of credit conditions linked to the recent crisis in the banking sector will be watched by the officials of the powerful Federal Reserve.

“If tighter financing conditions are very disruptive to the economy, the appropriate trajectory for the fed funds rate could be lower than it would be in their absence,” said Lisa Cook.

“But if the data shows continued strength in the economy and slower disinflation, we may still have some work to do,” she said.

jul/nth