Federal Reserve (Fed) leaders are weighing continued aggressive interest rate hikes and putting more pressure on the economy. US economyfollowing an impressive job market report in January.
On February 7, Fed Chairman Jerome Powell said the agency still had an important way to go to achieve its goal of bringing inflation to 2% annually, after the US economy added 517,000 jobs. in January and give unemployment rate down 3.4% – the lowest level since 1969.
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According to the head of the Fed, high inflation will not end quickly and his agency will have to raise interest rates higher.
Mr. Powell also noted that the process of controlling inflation may take a long time and not be smooth.
The Fed raised interest rates by 0.25 percentage points last week, the smallest increase since the central bank began adjusting rates in March 2022.
At the time, Fed officials did not expect more rate hikes after steady progress in controlling inflation.
The consumer price index has fallen continuously over the past six months to 6.5% year-on-year, and the personal consumer price index, the Fed’s preferred measure of inflation, has fallen to 5% annually.
However, the impressive job market growth in January could be a problem for the Fed, which predicts more job losses as lending rates soar. According to projections published in December 2022, the Fed forecasts the unemployment rate will rise to 4.6% by the end of 2023.
Other members of the interest-setting committee of Fed also take a hardline stance on future rate hikes.
Minneapolis Fed President Neel Kashkari said he does not see a reason to lower the Fed’s rate hike schedule.
Meanwhile, Atlanta Fed President Raphael Bostic said on February 6 that the central bank needed to act and raise interest rates more than expected.
However, some economists disagree with the Fed’s approach and argue that the US central bank has selectively analyzed the data.
The Fed should delay further rate hikes until it has a clearer picture of the economy, said economist Dean Baker of the Center for Economic Policy and Research.
International economists have also warned the central bank Monetary policy should not be overly tightened, given that this could push the global economy into an unnecessary recession.
In a report on the global economic outlook published last month, experts from the United Nations Economic and Social Council assessed that excessive tightening of monetary policy would push the world economy to a halt. world into recession.
Hong Nguyen (VNA/Vietnam+)