https://sputnikglobe.com/20220413/us-inflation-has-probably-peaked-but-rate-hikes-must-continue---federal-reserve-official-1094745021.html
US Inflation Has Probably Peaked But Rate Hikes Must Continue - Federal Reserve Official
US Inflation Has Probably Peaked But Rate Hikes Must Continue - Federal Reserve Official
Sputnik International
WASHINGTON (Sputnik) - US inflation has probably peaked with consumer prices growing 8.5% in March, but interest rate hikes will have to continue to ensure... 13.04.2022, Sputnik International
2022-04-13T22:20+0000
2022-04-13T22:20+0000
2022-08-06T13:36+0000
us federal reserve
interest rate
us
inflation
https://cdn1.img.sputnikglobe.com/img/07e6/04/05/1094486098_0:321:3070:2048_1920x0_80_0_0_439e7a0a54fc43ae083258b8996338e3.jpg
“March CPI is pretty much at the peak,” Waller said in an interview with CNBC, referring to the Consumer Price Index, which surged 8.5% in the year to March. “We'll start seeing some relief from inflation in the coming months, but that doesn't mean we won't need to hike rates.”Unrelenting inflation pressure has forced policy-makers at the Federal Reserve to embark on the fastest pace of interest rate hikes in 40 years to measure up to price growth.US producer prices jumped by a record 11.2% in the year to March, according to data on Wednesday that showed no let up in inflation pressure on the world’s largest economy. Producer prices refer to prices paid by wholesalers. It is regarded as "forward-looking inflation" as it tracks prices in the pipeline for goods and services that will eventually reach consumers.After slashing rates to nearly zero at the height of the COVID-19 outbreak, the central bank’s policy-making Federal Open Market Committee, or FOMC, approved the first pandemic-era rate hike on March 16, raising rates by 25 basis points (bps), or a quarter point.Many FOMC members, including Waller, have since concluded that the interest rate hike was too tame to rein in inflation galloping at its fastest pace since the 1980s, and that more aggressive increases of 50 basis points may be needed in the future.The central bank’s typical target for inflation is 2% a year - a level it considers “neutral.” To get to this, the Federal Reserve envisages that it will need six more rate hikes this year - one every monthly FOMC meeting from now.“I prefer a 50 bps rate hike in May, with a possible increase in June and July,” Waller said. “The [US economic and inflation] data supports 50 bps rate hikes. We want to get above the neutral by the later half of this year.”One dilemma for the Federal Reserve has been on how to suppress inflation without negatively impacting the economy, particularly the labor market that has been expanding at a record pace since the height of the coronavirus pandemic two years ago, when some 20 million jobs were lost.Waller, however, said a slight retreat in jobs growth owing to interest rate hikes will not hurt the labor market. “We can pull back demand for labor, and not have a big impact on jobs. We don't need to cause a shock, we will do what it takes to get inflation back down, but we can do it in an orderly way.”After a 3.5% contraction in GDP forced by the coronavirus pandemic measures in 2020, the US economy grew by 5.7% for all of 2021 - the biggest calendar-year growth since 1984.
Sputnik International
feedback@sputniknews.com
+74956456601
MIA „Rossiya Segodnya“
2022
Sputnik International
feedback@sputniknews.com
+74956456601
MIA „Rossiya Segodnya“
News
en_EN
Sputnik International
feedback@sputniknews.com
+74956456601
MIA „Rossiya Segodnya“
Sputnik International
feedback@sputniknews.com
+74956456601
MIA „Rossiya Segodnya“
us federal reserve, interest rate, us, inflation
us federal reserve, interest rate, us, inflation
US Inflation Has Probably Peaked But Rate Hikes Must Continue - Federal Reserve Official
22:20 GMT 13.04.2022 (Updated: 13:36 GMT 06.08.2022) WASHINGTON (Sputnik) - US inflation has probably peaked with consumer prices growing 8.5% in March, but interest rate hikes will have to continue to ensure price pressure does not start raging again, Federal Reserve Governor Chris Waller said on Wednesday.
“March CPI is pretty much at the peak,” Waller said in an interview with CNBC, referring to the Consumer Price Index, which surged 8.5% in the year to March. “We'll start seeing some relief from inflation in the coming months, but that doesn't mean we won't need to hike rates.”
Unrelenting inflation pressure has forced policy-makers at the Federal Reserve to embark on the fastest pace of interest rate hikes in 40 years to measure up to price growth.
US producer prices jumped by a record 11.2% in the year to March, according to data on Wednesday that showed no let up in inflation pressure on the world’s largest economy. Producer prices refer to prices paid by wholesalers. It is regarded as "forward-looking inflation" as it tracks prices in the pipeline for goods and services that will eventually reach consumers.
After slashing rates to nearly zero at the height of the COVID-19 outbreak, the central bank’s policy-making Federal Open Market Committee, or FOMC, approved the first pandemic-era rate hike on March 16, raising rates by 25 basis points (bps), or a quarter point.
Many FOMC members, including Waller, have since concluded that the interest rate hike was too tame to rein in inflation galloping at its fastest pace since the 1980s, and that more aggressive increases of 50 basis points may be needed in the future.
The central bank’s typical target for inflation is 2% a year - a level it considers “neutral.” To get to this, the Federal Reserve envisages that it will need six more rate hikes this year - one every monthly FOMC meeting from now.
“I prefer a 50 bps rate hike in May, with a possible increase in June and July,” Waller said. “The [US economic and inflation] data supports 50 bps rate hikes. We want to get above the neutral by the later half of this year.”
One dilemma for the Federal Reserve has been on how to suppress inflation without negatively impacting the economy, particularly the labor market that has been expanding at a record pace since the height of the coronavirus pandemic two years ago, when some 20 million jobs were lost.
Waller, however, said a slight retreat in jobs growth owing to interest rate hikes will not hurt the labor market. “We can pull back demand for labor, and not have a big impact on jobs. We don't need to cause a shock, we will do what it takes to get inflation back down, but we can do it in an orderly way.”
After a 3.5% contraction in GDP forced by the coronavirus pandemic measures in 2020, the US economy grew by 5.7% for all of 2021 - the biggest calendar-year growth since 1984.
