Powell (Fed) insists that “further rate hikes will be needed”.

Chairman of the Federal Reserve, Jerome Powellreaffirmed on Tuesday that “ more ha of interest rate increases will be needed“, as he did in the press conference that followed the last meeting of the organization, and also underlined that monetary policy is not yet “sufficiently restrictive”..

He also referred to the last job report which created a surprise with the creation of 517,000 jobs in the United States in January, a level which surprised even Powell, who did not expect such a “strong” figure. The Fed chief referred to the resilience of the labor market as an indication that The restoration of price stability will take longer than initially expected..

“The January report was stronger than expected, but I would say it shows why we… We believe this is a process that will take a long time.“, he underlined during a speech delivered during an economics conference at the Economic Club of Washington.

However, he warned that if the data continues to rise above expected levels, the central bank could revise your interest rate target.

“So if we continue to receive, for example, strong labor market reports or higher inflation reports, we may have to do more and raise rates more than expected.” he assessed.

Regarding the return to price stability, he stressed that. “significant declines in inflation” are expected this year.but it will take until 2024 for price increases to approach the 2% target, a target on which Mr Powell has ruled out any change.

Powell showed the scenario the Federal Reserve is working on, which is based on the assumption that ” it will take some time to get inflation under control and further rate hikes will be needed.“.

The main problem facing the agency now is: persistent inflation in the services sectorwhich has not yet shown “signs of disinflation”, observed in the manufacturing sector, Mr. Powell therefore stressed that “there is still a long way to go” to bring inflation down to 2%.

“The process of disinflation, the process of reducing inflation, started and it started in the goods sector, which is about a quarter of our economy, but she still has a long way to go. These are the first steps,” he concluded.

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