![]() Powell acknowledged the touchy calibration needed to vanquish inflation without restricting activity more than necessary and to stay ahead of any downturn with lower rates as inflation falls and activity ebbs. And we need to be prepared to raise further." We think we're going to need to hold policy at restrictive levels for some time. Core inflation is still pretty elevated," Powell said in a press conference after the end of the Fed's two-day policy meeting. "We need to see that inflation is durably down. The personal consumption expenditures price index stripped of food and energy costs slowed notably in June to 4.1% on a year-over-year basis after being lodged for months near 4.6%, but is still more than double the 2% target.įed Chair Jerome Powell said last week that the pieces of the low inflation "puzzle" may be aligning, but he doesn't trust it yet. While headline inflation has fallen sharply from the highs of 2022, measures of underlying price pressures have moved more slowly. Employment compensation costs rose 4.5% for the 12-month period ending in June, another decline from pandemic-era highs but also above what the Fed would regard as consistent with its 2% inflation target. ![]() ![]() Recent data on wages, growth and prices show the dilemma facing policymakers as they consider whether to push borrowing costs even higher and how long to leave rates elevated, a discussion that could determine the economy's broad direction - growing or shrinking, with rising joblessness or still-strong job markets - in 2024, a presidential election year.Īfter sixteen months of rapid monetary tightening, the economy still grew at a faster-than-expected 2.4% annualized rate in the second quarter, above what's considered its non-inflationary trend, with that momentum seen continuing into the current quarter. Reuters Graphics Reuters Graphics 'PUZZLE' PIECES COMING TOGETHER ![]()
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