“We are prepared to raise rates further if appropriate and intend to keep policy tight until we are confident that inflation is sustainably declining toward our target.” he stated in a speech at the Jackson Hole (Wyoming) forum.
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The president of the US regulator remained faithful to the words he spoke at the last press conferencein which the body announced the rise of another 0.25 percentage points in July, up to a range of between 5.25 and 5.5%.
However, in the conclusions of his speech he did open the door for a pause: “In the next meetings we will evaluate our progress based on the totality of the economic data and the evolution of the perspectives and risks.
Based on this assessment, we will proceed cautiously in deciding whether to tighten monetary policy further or instead hold the rate,” he said.
Since in June 2022 it broke its record of the last 40 years by standing at 9.1% – as a result of the interruption of the supply chain due to Russia’s war against Ukraine and the last blows of the pandemic – US inflation was falling for twelve consecutive months until July, when it rose two tenths to 3.2%.
The sustained decline, Powell noted, “is very good news” but “food and energy prices are influenced by global factors that remain volatile and can provide a misleading signal of where inflation is headed.”
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For this reason, he explained, the most important thing is the underlying inflation data, which measures the rise in prices without counting energy or food. This reached a maximum of 5.4% in February 2022 and gradually decreased to 4.3% in July, Powell recalled.
“The declines in core inflation in June and July were welcome, but two months of good data are just the beginning of what it will take to build confidence that inflation is sustainably declining towards our target” of 2%, he said. .
For this reason, the data on “where core inflation stabilizes” in the coming quarters will be key to the Fed’s decision, whose Federal Open Market Committee (FOMC) will meet on September 19 and 20 to decide whether to raise or pause the increases.
Powell delivered his speech at the traditional forum in Jackson Hole (Wyoming). Hosted by the Kansas City Federal Reservethe meeting that started yesterday brings together central bankers, policy makers, academics and economists.
This year’s theme explores several major and potentially long-lasting events affecting the global economy, the possible long-lasting side effects on the way economies are structured, both nationally and globally.
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Between yesterday and tomorrow, they will pass through the Jackson Hole stage the President of the European Central Bank (ECB), Christine Lagarde, the Deputy Governor for Monetary Policy of the Bank of England Ben Broadbent, and the Governor of the Bank of Japan, Kazuo Ueda.
EFE
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