Federal Reserve warns inflation still ‘too high’ in US economy

*United States Federal Reserve Chairman Jerome Powell, in a recent highly anticipated speech at the annual Jackson Hole symposium of Central Bankers, in Wyoming, hints at the task of taming inflation in the American country and around the world, as it is likely ‘to stay longer’

Isola Moses | ConsumerConnect

United States Federal Reserve Chairman Jerome Powell says interest rates in in the American  country and around the world are likely to stay ‘higher for longer’.

Powell stated inflation remains ‘too high’ and interest rates may need to rise again, to bring it back under control.

In a highly anticipated speech at the annual Jackson Hole symposium of Central Bankers in Wyoming, US, Powell said the task of taming inflation in the United States is far from over.

However, he has insisted the Fed will “keep at it until the job is done,” agency report said.

ConsumerConnect reports the inflation in the US recently rose to 3.2 percent from a 40-year high of 9 percent.

It was learnt the comments sent the Dollar higher on the currency markets and borrowing costs rose on the bond markets as investors digested his seemingly hawkish tone.

Responding to the development, analysts said the speech reinforced the view that interest rates in the US and around the world were likely to stay ‘higher for longer’ – though many still expect the Fed to start cutting rates 2024 as the economy slows.

Powell also stated: “It is the Fed’s job to bring inflation down to our 2 percent goal, and we will do so.

“Although inflation has moved down from its peak – a welcome development – it remains too high.

“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

Inflation in the US has fallen to 3.2 percent from a 40-year high of 9 percent.

Having raised rates from close to zero to over between 5.25 percent and 5.5 percent, Powell said Fed officials would ‘proceed carefully’ as it weighs up further hikes.

He further suggested the Fed could hold rates steady at its next meeting September 2023.

The decisions would depend on economic data, said he.

Powell added: “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks.”

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