The Fed Chairman is determined to control inflation even though he has to continue to raise interest rates
Federal Reserve Chairman Jerome Powell – Photo: BLOOMBERG
According to CNBC, Mr. Powell emphasized that “there will not be any hesitation” in implementing the goal of controlling inflation.
He said he would cut interest rates until he felt that financial conditions were appropriate and inflation was coming down.
In early May, the Fed raised the benchmark borrowing rate to 0.5 percentage points. This is the second interest rate increase the Fed has made in 2022, in the context of inflation rising to the highest level in 40 years.
Mr. Powell said the Fed could continue to make similar moves, as long as economic conditions remain unchanged.
He repeated his pledge to bring inflation closer to the Fed’s 2% target. This is not easy, he warned, and could come at the expense of an unemployment rate of 3.6%.
US economic growth shrank 1.4% in the first quarter of 2022, largely due to supply shortages caused by the widespread Omicron variant of COVID-19 and the war in Ukraine.
In addition to raising interest rates, the Fed has halted its monthly bond-buying program, also known as quantitative easing, and will begin cutting part of its $9 trillion assets from June.
However, observers fear that increasingly tightening monetary policy will cause a stronger recession and cause Wall Street stocks to sell off.
Mr. Jerome Powell hopes the Fed can achieve its goal of curbing inflation without causing the economy to collapse.
Strong USD surge ‘does more harm than good’
On May 17, the Financial Times warned that developing countries face increasing risks. These countries are already facing the risk of economic, energy, food and debt crises.
For most of these countries, a stronger dollar will push up import prices and make paying off foreign debt more expensive. This situation will be even more stressful because countries have only just recovered from the COVID-19 pandemic.
Food and energy price inflation is a particularly serious problem for low-income countries. The cost-of-living crisis will push the most vulnerable into starvation.
If it continues to spread, the Financial Times warns that the bleak outlook in individual countries will combine to create a series of defaults, social, political and geopolitical unrest that will weigh on economic growth. Global.
at Blogtuan.info – Source: tuoitre.vn – Read the original article here
