Fed’s George sees policy interest rate near 2% by August -Breaking
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(Reuters). Monday’s statement by Esther George of the Kansas City Federal Reserve Bank stated that Esther George expects the U.S. Central Bank to increase its target rate to 2% by August. Additional action is dependent upon how supply and demande are affecting inflation.
George stated that Fed policymakers had stressed a need to quickly restore price stability. He said this in remarks George prepared to deliver to an agricultural symposium hosted by the Kansas City Fed. Further tightening will be informed by evidence that inflation has clearly slowed.
To rein in the inflation at its 40-year peak, the Fed has increased interest rates. This has lifted short-term borrowing costs by a range between 0.75%-1.1% this year. Fed Chair Jerome Powell indicated that rates will rise by an additional full percentage point at the Fed’s June and July meetings.
The key issue for policymakers is the bank’s response to that event. George used some of her prepared remarks for a summary of the cross currents that are affecting U.S. economics and making it so hard to make an assessment of the future of inflation. Russia’s war and China COVID-19 lockdowns, respectively, could impact global growth, reduce inflation pressure, and disrupt production capacity, increasing inflation pressure.
“The central bank’s job is to prevent persistent imbalances from feeding into inflation and unmooring inflation expectations,” George said.
According to her, Fed rate hikes cannot reduce demand or influence factors that have a significant impact on inflation. The Fed’s efforts, along with other factors, will have an impact on the direction of monetary policy. This requires constant and meticulous monitoring.
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