The central bank is expected to tackle accelerating inflation by raising its policy rate for the first time in March.
Of the United States the economy is on a strong footing, consumer prices are rising and employment is recovering, so there is no longer a need for a broadly stimulative monetary policy, says the governor of the country’s central bank Jerome Powell.
Powell was heard by the U.S. Congress on Tuesday about the end of his term. As expected, the consultation focused on inflationary pressures.
Upward pressure on consumer prices is seen to continue until the middle of the year, Powell said. He assured that the central bank is ready to respond to the situation and will do its utmost to prevent accelerated inflation from “rooting” in the economy.
According to AFP, Powell said in a hearing that inflation is “very close to the top of the list” of risks to the economic outlook. According to Powell, the current rate of price increase is “very far from the target”.
The central bank is expected to tackle accelerating inflation by raising its policy rate for the first time in March. Admittedly, Powell stressed in his hearing that the central bank has not made a decision on raising the key interest rate or on schedules.
Investment bank Goldman Sachs has predicted the central bank will raise four times this year and will start reducing its balance sheet in July or earlier.
In the central bank’s view, the rise in prices is the result of increased demand in areas where there have been disruptions in supply chains. According to Powell, the central bank expects a “return to normal conditions” in the coming months.
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