This content was published on May 13, 2023 – 06:23 July,
May 13, 2023 – 06:23
One of the members of the Board of Governors of the Federal Reserve and appointed Vice President Philip Jefferson said that he is more optimistic than other officials in the US Central Bank about the path of inflation, saying that the institution is “on the right path.”
“I think we’re on the right track,” Jefferson said during a speech at the Hoover Institution in Stanford, California.
“Is inflation still too high? Yes. Is the current inflation decline uneven and slower than we all wish? Yes.”
But he stressed that the Federal Reserve “is doing what is necessary and expected. Monetary policy affects the economy and inflation with long and uneven deadlines, and the full effect of our rapid (policy) tightening is not yet likely to happen.”-
These statements contrast with the statements of other reserve officials who did not rule out a new hike in interest rates this week, while the markets widely expect these increases to stop.-
Inflation eased slightly in the United States, reaching a rate of 4.9 percent on a yearly basis, according to the Consumer Price Index (CPI), which was published on Wednesday. However, at a monthly rate, inflation rose to 0.4 percent, compared to 0.1 percent in March.
However, the Federal Reserve prefers another measure of inflation, which is the personal consumption expenditures (PCE) index, which is issued at the end of the month, and counts on its decline to 2%, after it was 4.2% in March at an annual rate.
Philip Jefferson continued, “The good news is that food and energy prices fell in March (…). The bad news is that only slight progress was recorded on the level of latent inflation” that is, related to other categories.
He also stressed the existence of “great uncertainty about the extent of the tightening of borrowing conditions during the coming year in response to the banking crisis and the size of the possible repercussions of this tightening on the US economy,” recognizing the existence of “the risk that the impact will be greater than expected.”
Since March 2022, the Federal Reserve has raised the key interest rate by five percentage points, from 0 to 0.25 percent, to between 5 and 5.25 percent. The next meeting of the Federal Reserve will be held on the 13th and 14th of June.
On Friday, US President Joe Biden chose Philip Jefferson, who joined the Federal Reserve Board of Governors in May 2022, to serve as Vice President of the Federal Reserve, and the Senate should confirm this appointment.