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(Update ec5414 with more declarations)
Washington, Dec 1 (EFECOM).- The president of the Federal Reserve (Fed), Jerome Powell, stated this Friday that it would be “premature” to conclude that the Fed has raised rates “enough” to firmly contain prices .
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy could be eased. We are prepared to tighten policy further if it is appropriate to do so,” said the president of the US central bank at an event at the Spelman College of Atlanta (USA)..
Economic data will be what will tell whether the Fed has done “enough” or whether it needs to “do more.” “We do not need to be in a hurry now that we have acted quickly and forcefully. We are achieving what we wanted to achieve,” said the president of the regulator.
And the restrictive monetary policy, he explained, is putting downward pressure on economic activity and inflation. “Monetary policy is believed to affect economic conditions with a delay, and the full effects of our tightening are likely not yet felt,” he noted.
Although inflation fell half a point in October, after having risen or remained stagnant since June, to 3.2%, Powell said that this drop is not enough since it is far from the desired 2%.
“We are making decisions meeting by meeting, based on all the incoming data and its implications for the outlook for economic activity and inflation, as well as for the balance of risks,” he stressed.
Inflation, he added, “is still well above the target, but it is moving in the right direction” and therefore “the right thing now is to act carefully, think carefully about how things are going, letting the data tell us the story.”
There are two weeks left before the Fed holds its last monetary policy meeting of the year, after which it could decide on a new rate hike or keep them as they are, as it did in its last meeting earlier this month. Rates are now in the range of 5.25% and 5.5%, their highest level since 2001.
The Fed has not ruled out that there may be a new increase before the end of the year in the last meeting to be held on December 12 and 13, given that the economy does not show signs of cooling but quite the opposite.
Core inflation, a key data that the US central bank analyzes to make its interest rate decisions, fell one tenth year-on-year in October, to 4%.
Regarding the labor market, another key piece of information, job creation slowed down considerably to 150,000 new jobs, 147,000 less than those generated a month earlier, and the unemployment rate rose one tenth to 3.9%.
According to the minutes of the last Fed meeting, the members of the Federal Open Market Committee (FOMC) agreed that it is necessary to “proceed with caution” when studying possible new rate increases and that it will be decided in function of the totality of incoming economic information.
Furthermore, all participants agreed that “it would be appropriate for policy to remain in a restrictive stance for some time,” until inflation “is clearly declining sustainably toward the target” of 2%. EFECOM
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