The US central bank’s fight against inflation is “unconditional” by Reuters

The US central bank’s fight against inflation is “unconditional” by Reuters
The US central bank’s fight against inflation is “unconditional” by Reuters

© Reuters. Jerome Powell, Federal Reserve Chairman (US central bank) in Washington on Thursday. Photograph: Mary Calvert/Reuters.

(Reuters) – Federal Reserve Chairman Jerome Powell said on Thursday that the Fed’s commitment to rein in 40-year high inflation was “unconditional,” even as he acknowledged that a sharp interest rate hike could also raise unemployment.

He told the House Financial Services Committee, “We really need to restore price stability…because without that we will not be able to maintain periods of maximum employment in which benefits are distributed very broadly…It is something we need to do…we have to do.” “.

Powell’s comments came on the second day of the tough questions he faces in Congress about the Fed’s efforts to control inflation, which, by the Fed’s preferred method, has more than three times the target rate of two percent.

On Wednesday, Powell told the Senate Banking Committee that the central bank was not trying to create an environment that would push recession but that it was “certainly possible” given recent global events, particularly the Ukraine war and the COVID-19 pandemic, which made it more difficult to curb inflation without side effects.

Federal Reserve Member Michael Bowman said on Thursday she supports a 75 basis point interest rate increase in July followed by 50 basis point increases in the “next few” meetings, a tighter approach to monetary policy than most of her central bank peers.

Economists polled by Reuters this week said they expect the US Federal Reserve to raise interest rates by 75 basis points next month, followed by a half percentage point in September, without reversing the quarter percentage point moves before November at the earliest.

Powell told the House Committee on Thursday that there is a risk that the Fed’s moves will cause unemployment to rise. Unemployment was 3.6 percent in May in the United States.

“We do not have precise control tools … so there is a risk that unemployment will rise from a historical low level. A labor market with unemployment rates of 4.1 percent or 4.3 percent is still a very strong labor market,” he said.

But he said a recession was not inevitable and expected the US economy to grow in the second half of this year after a slow start in 2022.

(Prepared by Salma Najm for the Arab Newsletter – Editing by Ali Khafaji)

The article is in Arabic

Tags: central banks fight inflation unconditional Reuters

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