2023-05-19 15:19:17
Powell, Governor of the US Federal Reserve
Today, Friday, US Federal Reserve Chairman Jerome Powell stated the following points:
- Inflation is well above the US Federal Reserve’s target.
- Price stability is the foundation of a strong economy.
- The responsibility of the US Federal Reserve is to maintain price stability.
- Inflation is a major problem
- The US Federal Reserve is firmly committed to returning to its 2% inflation target.
- The banking system is strong and resilient.
- Monetary policy and control instruments are separate.
- The tools are often complementary, but there are no absolute monetary policy/or supervisory tools.
- The US Federal Reserve may not have to raise rates further because of the tightening of bank credit conditions.
- Supply shocks are likely to persist but difficult to predict.
- Previously abundant supply may have kept inflation low, but that is unlikely to happen again.
- Major central banks remain responsible for price stability regardless of supply shocks.
- The relationship between stagnation in the labor market and inflation is no different than it was before the pandemic.
- A stagnation in the labor market does not constitute early inflation, but he believes that stagnant employment will be a factor in future inflation.
- Inflation and non-residential services are particularly vulnerable to labor market strength.
- The neutral interest rate may have increased significantly during the pandemic.
- The summary of economic forecasts from the US Federal Reserve is very helpful even though it is not a prediction.
- The US Fed has now come a long way, with uncertainty about the policy lag effects
- cash.
- Today’s guidance is limited to assessing conditions that may require further steps, and the assessment will be ongoing.
- Markets are pricing in a different path than the US Federal Reserve.
- This seems to reflect different predictions of inflation falling more quickly
- Until now.
- The data seems to support your expectations that it will take time to bring down inflation.
- Surveys of market participants are closer to our expectations.
- We can wait for the economic data to come out now.
It should be noted that, in his interview with the Financial Times, the policy maker at the US Federal Reserve Bank, James Bullard, in St. Louis, yesterday, Thursday; The US Federal Reserve to raise interest rates as an insurance policy against inflation.
In this context, Bullard expected inflation to decline, but at a slower pace, and this may require obtaining some insurance to raise interest rates to some extent to ensure control of inflation. He indicated that the US Federal Reserve is likely to raise interest rates by 25 basis points again next month, bringing the interest rate to 5.25-5.50%.
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