US Federal Reserve: Fed chief expressed concern, despite all recent efforts, inflation is very high

Posted on 9th Jan 2023 by rohit kumar

US Federal Reserve Governor Lisa D Cook has expressed concern over inflation. He has said that despite some encouraging signs recently, inflation in the US remains very high. This is a matter of great concern for the country. He made these remarks earlier this week during his address at the 2023 Allied Social Science Association (ASSA) Annual Meeting in New Orleans Louisiana.

 

Lisa D Cook said that the ever-increasing inflation in the country is a matter of concern. Along with this, he also claimed that he is determined to bring inflation back to the US target of 2 percent. Cook said he spoke about 'considering inflation'. Further in his address, he said that the high and volatile inflation observed during the last two years reflects supply-chain disruptions as well as rapid changes in demand. This has created a massive demand-supply imbalance in various sectors.

 

As such, there is a need to remain vigilant to ensure that pandemic-period cost pressures and disruptions do not have a lasting impact on inflation. He further said that inflation expectations of households and firms could rise if inflation from cost erosion and supply disruptions persists for a long enough period. On the other hand, US central bank officials believe that in 2023 it would not be right to loosen the stance of monetary policy in terms of interest rates. According to the minutes of the latest policy meeting held on December 13-14, none of the participants estimated that it would be appropriate to lower the federal funds rate target in 2023.

 

Significantly, the consumer inflation rate was 7.1 percent in November. The US Federal Reserve recently hiked interest rates by 50 basis points (bps). The central bank's policy rate is now on target for 4.25-4.50 percent, the highest level in 15 years. In particular, it was near zero in the early part of 2022. This is the fourth consecutive increase in the magnitude of 75 basis points, before the recent increase of 50 basis points.

 

Raising interest rates is a monetary policy tool that usually helps suppress demand in the economy, thereby reducing the rate of inflation. Inflation in the US remains high, reflecting pandemic-related supply-demand imbalances, high food and energy prices, and broad-based price pressures.

 

Also Read: "Chinese toys are imported without a license, toys are sent in the name of chocolate"- BSI Director General

Other news