Washington: Officials at the US Federal Reserve Board (Fed) said Friday that the central bank must stick to its policy of raising interest rates until next year in order to bring inflation down to its 2% target. Fed President Christopher Waller has warned that inflation will take time to come down, backing another “significant rise” in benchmark lending rates at the September 20-21 policy meeting. A strong job market and the fact that the world’s largest economy has avoided a recession will allow the Fed to continue to move aggressively, he said in a speech prepared for the conference in Vienna.
“It will take some time for inflation to return to its 2% target,” he said, adding that the Fed “will tighten policy into 2023.” His comments emphasized on Thursday that policymakers need to move “strongly” to avoid a recurrence of the painful inflation surge the U.S. economy suffered in the 1970s and 1980s, according to U.S. Central Bank chief Jerome. • Reflects recent hawkish statements by other Fed officials, including Powell.
U.S. inflation hit its highest level in 40 years this year, and the economy contracted by two-quarters (generally seen as a sign of a recession), but unemployment was low and spending is strong, suggesting that activity has not slowed down significantly. “Fears of a recession that began in the first half of this year have receded, and the U.S. labor market is strong, giving us the flexibility to aggressively fight inflation,” Waller said.
“At the moment, there is no trade-off between the Fed’s employment and inflation targets. How high policymakers have to raise the benchmark rate will depend on future inflation data, Waller said.
But “I think policy decisions at the next meeting will be frank.” “It is too early to tell whether inflation is declining meaningfully and sustainably,” even with encouraging signs of easing price pressures, it warned. “This is a battle we can’t walk away from, and we’re not going to walk away from.”
The ECB warned on Thursday that inflation was “too high” and announced a record 0.75% gain, warning that it was likely to exceed its target for “a long period of time”. ECB President Christine Lagarde has revealed that interest rates are far from the levels needed to keep inflation down. “We actually made the decision today to continue raising rates … because we believe inflation is far from the rate we expect to return to our medium-term target of 2%,” she said. .
Lagarde also warned that the eurozone risks slipping into a recession if Russia cuts off gas completely, which is nearly complete. was deemed even more hawkish than Lagarde’s comment. “We need to keep doing it until the job is done to avoid the very high social costs” of inflation surges in the 1970s and 1980s, Powell said. American think tank.
Chris Beauchamp, Principal Market Analyst at online trading platform IG, said: The euro has regained some footing after paring to $0.9934 after paring to $0.9934. The Federal Reserve (Fed) has made it clear that it plans to keep raising interest rates aggressively to curb sharp inflation, even at the cost of some economic pain. – AFP