The Federal Reserve is committed to getting inflation under control and getting it back to its 2 percent target, Richmond Fed President Thomas Barkin said Wednesday, adding to a list of officials stressing the Fed’s determination to curb the rise in prices which are running at the fastest rate in four decades.
“We are determined to bring inflation back to our 2% target and we have made it clear that we will do whatever it takes,” Barkin said during an economic event in Virginia.
Fed President Jerome Powell said last week that the U.S. central bank may consider another “unusually large” rate hike at its next meeting on Sept. 20-21, as officials make their decisions. based on a wealth of data ranging from inflation data to employment, consumer spending and economic growth data.
It is recalled that the Fed raised its interest rates by 0.75% last week, in the range of 2.25%-2.50%. It was the second consecutive hike of that size, with the Fed having raised interest rates by 225 basis points since March as its officials become increasingly aggressive in trying to rein in persistently high inflation, even as it increases fears of recession.
Specifically on concerns about a recession, Barkin said they are “a bit inconsistent” based on the current rate of job growth of nearly 400,000 a month and with the unemployment rate at 3.6%, close to to a 50-year low.
Barkin added that he “sees” inflation easing, but “not immediately, not sharply and not predictably.”
As he pointed out, there are three factors that will contribute to its easing: the flattening of demand, partly from the Fed’s interest rate hikes, the improvement of global supply chains and the easing of pressures on commodity prices. But he added that even if the Fed doesn’t get help from global developments and supply chains, “we have the tools and the credibility, with households, businesses and markets, to achieve this outcome over time.” next year, and we will do it”.
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