“I will not hesitate to raise interest rates if it is appropriate.”
“Risks of economic recession and continued inflation coexist”
Jerome Powell, chairman of the U.S. Federal Reserve, said he was not sure whether the current interest rate was high enough to achieve the inflation target of 2%.
On this day, Chairman Powell said in an International Monetary Fund (IMF) panel discussion, “The Federal Open Market Committee (FOMC) is doing its best to achieve a sufficiently tight monetary policy stance to reduce inflation to 2% over time.” However, he said, “It is difficult to be certain that this trend has been achieved.”
The inflation rate measured by the U.S. Consumer Price Index (CPI) peaked at 9.1% last year and then fell. It still remains at 3.7%.
At the same time, he expressed a cautious stance, saying, “If it is appropriate to raise interest rates further, we will not hesitate.” This is interpreted to mean that an interest rate increase is not appropriate at present.
Previously, on the 1st, the Federal Reserve froze the benchmark interest rate at 5.25-5.50% twice in a row. Short-term benchmark interest rates are at the highest level in 22 years. However, the Federal Reserve has raised interest rates only once since last May.
“We believe that central banks face roughly the same risk of derailing the economy by raising interest rates too high and the risk of not raising rates enough, which could sustain or worsen inflation,” Powell explained.
At the same time, he said, “We will continue to move cautiously,” and AP pointed out that “This is widely interpreted to mean that the Fed will continue to closely monitor the data, but it is not likely to lean toward an increase.”
The Federal Reserve has raised the benchmark interest rate 11 times since March of last year. As a result, interest rates on many consumer and business loans have become much higher.
Last week, Chairman Powell mentioned that if government bond yields remain high, inflation can be suppressed without raising the benchmark interest rate.
However, Chairman Powell left open the possibility of further interest rate hikes, saying in a question and answer, “We are still thinking about how much the Federal Reserve should raise the benchmark interest rate.”
Last week, the U.S. government announced that the number of non-agricultural business jobs in the country only increased by 150,000 last month, and the unemployment rate was 3.9%, up 0.1 percentage points from the previous month.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.