Skip to content

Fed Chief Admits US Inflation a “Persistent” Threat

A wave of price increases that has complicated the recovery of USA in full pandemic it may last longer than anticipated, according to Federal Reserve Chairman Jerome Powell, who warned on Tuesday of the threat of “high and persistent inflation” in the country.

  • Shooting at a US high school leaves three dead
  • US restricts visas to Cuban officials and military accused of repressing protesters
  • Mark Meadows, Trump’s former chief of staff, decides to cooperate in the investigation into robbery of the Capitol

For months, the head of the Fed (central bank) has described the explosion of inflation as “transitory”, arguing bottlenecks in the supply chain and the shortage of goods and workers. However, this Tuesday he told the Senate Banking Commission that it is time to “withdraw” that term.

The central bank’s benchmark price indicator posted a 5% rise in the 12 months ending in October, well above the Fed’s 2% target.

“Clearly, the risk of more persistent inflation has increased,” Powell told lawmakers.

But he said the Fed “will use its tools to make sure higher inflation doesn’t take hold.”

The Fed has already started to withdraw its stimulus measures put in place to cushion the blow of the pandemic on the economy, but Powell, whom President Joe Biden had nominated last week for a second term at the head of the central bank, had Said previously shown patience regarding raising interest rates, arguing that supply problems would be resolved in the coming months.

However, at this hearing he suggested that the pace of withdrawal from monthly asset purchases could be accelerated. That would mean that the Fed would be in a position to raise the benchmark interest rate earlier than expected.

– Interest rate escalation –

At its last meeting, the Federal Reserve decided to start reducing its monthly bond purchases, which at the current rate would end in mid-2022.

However, since then the data has shown “high inflationary pressures, a rapid improvement in many labor market indicators” and “strong spending,” indicating “significant growth in the coming months,” Powell said.

That is why it is “appropriate, from my perspective, to consider ending the decline in our asset purchases … perhaps a few months earlier.”

The Fed lowered the benchmark lending rate to zero at the start of the pandemic, and Powell has said they won’t raise rates until the bond-buying program ends.

A growing group of Federal Reserve officials have publicly supported ending bond purchases more quickly, with one or two rate hikes next year, while some private economists are advocating three hikes.

Globally, Powell has acknowledged that central bankers did not take into account the impact bottlenecks in the supplement chain would have on prices in their predictions.

These global drawbacks have caused shortages in a variety of products, while pent-up demand for goods also contributed to the price explosion.

RECOMMENDED VIDEO

IT MAY INTEREST YOU

  • Biden invites Guaidó to his great summit of the world’s democracies
  • Who is Emma Coronel, the wife of ‘El Chapo’ Guzmán sentenced to 3 years in prison in the US for drug trafficking and money laundering
  • Emma Coronel: How many years in prison did the US justice request for the wife of ‘El Chapo’ Guzmán?
  • Ómicron: US admits that it will take weeks to know the new variant of the coronavirus and its effects
  • Suspect for murdering and throwing away a Latino girl in the Bronx arrested 22 years after the crime

.

Share this article:
globalhappenings news.jpg
most popular