In his prepared testimony for the US House of Representatives Committee on Financial Services, the Chairman of the Federal Reserve, Jerome Powellstressed that the fight to reduce inflation and return to its target of 2% requires a considerable effort. The official pointed out that, although inflation has decreased since the middle of last year, recent progress has been slow.
Powell acknowledged that inflationary pressures remain high and that the process of reaching the goal of 2% It will take time. Although the Fed did not raise interest rates at the last Federal Open Market Committee meetingmentioned that most of the participants expect additional increases by the end of the year.
Investors have expectations that increases be resumed at the July meetingalthough there are doubts about future increases according to financial market indicators.
Powell’s words before the Lower House
In his appearance before the committee, Powell stated: “My colleagues and I understand the difficulties that high inflation is causing and we are firmly committed to reducing it back to our goal Of 2%“. The hearing, the first of two appearances this week, was held on Capitol Hill. The Fed chairman will also appear before the Senate Banking Committee.
The official described the current debate among those responsible for monetary policy, who consider the continued strength of the labor market and economic growth “modest“In contrast to the full impact of rapid rate hikes, which has not yet been felt in the economy as a whole.
The tightening of monetary policy is having an impact on sectors sensitive to interest rates, like the real estate market, but it will still take time for all the effects and their influence on inflation to be perceived. The tension in the banking sector also is creating obstacles for households and businessesthe effects of which remain uncertain, Powell added.
And he commented, given this scenario and raising interest rates by five percentage points approved by the Fed since March 2022, that the decision not to raise rates last week was considered a step “prudent” which will allow the Committee to assess further information and its implications for monetary policy.
Source: Ambito
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