The Azerbaijan State News Agency


US inflation remains too high, Fed prepared to raise rates further: Chair Powell

US inflation remains too high, Fed prepared to raise rates further: Chair Powell

Baku, August 26, AZERTAC

US Federal Reserve Chair Jerome Powell on Friday said inflation remains too high and the central bank is prepared to raise interest rates further, according to Anadolu Agency.

"We intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down to our objective," he said in his speech at the annual three-day Jackson Hole symposium in the US state of Wyoming.

"In the upcoming meetings, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks," he added.

Powell said high inflation is a result of "very strong demand" and "pandemic-constraint" supply.

"Process of bringing down inflation still has "a long way to go" even with the more favorable recent macroeconomic reading," he said.

The Fed, since March 2022, has undertaken one of the most aggressive monetary tightening in history to fight record inflation, which soared to a four-decade high of 9.1% in June 2022.

The bank raised interest rates by a total of 425 points in seven hikes last year, which were followed by 25 basis points apiece on Feb. 1, March 22, May 3, and most recently July 26.

Powell noted that core PCE inflation peaked at 5.4% in February on a 12-month basis and declined gradually to 4.3% in July this year.

Although the core inflation monthly reading in June and July were welcomed, "two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably" towards the Fed's goal of 2%, according to the Fed chair. "We can't yet know the extent to which these lower reading will continue, where the underlying inflation will settle over the coming quarters. The 12-month inflation is still elevated and there is substantial further ground to cover to get back to price stability," he explained.

The chair said prices for goods, housing services and all other services are the main contributors to high core PCE inflation. Although the core inflation for durable goods has fallen sharply, especially in the last two months, he stressed that on a 12-month basis core goods inflation remains well above its pre-pandemic level. "Sustained progress is needed and restrictive monetary policy is called for to achieve that progress," he added.

Powell said the effects of Fed's monetary policy became more apparent in the US housing sector, as mortgage rates doubled over the course of last year, causing housing starts and sales to fall and house price growth to plummet. "Because leases turn over slowly, it takes time for a decline in market rent growth to work its way into the overall inflation measure. The market rent slowdown has only recently begun to show through that measure," he added.

The chair emphasized that if market rent growth settles to pre-pandemic levels, housing services inflation should decline toward its pre-pandemic level as well, and noted that the Fed will continue to watch the market rent data closely.

Powell said the 12-month inflation for the final category of all other services, such as health care, food, transportation and accommodation, has moved sideways, but argued it is encouraging that their inflation measure over the past three to six months has declined, since they are less affected by global supply chain bottlenecks.

"Production of these services are also relatively labor intensive and the labor market is tight. Given the size of this sector, some further progress is essential in restoring price stability. Over time, restrictive monetary policy will help bring aggregate supply and demand back into better balance, reducing inflationary pressures in these key sectors," he explained.

Powell said the Fed's restrictive monetary policy to bring inflation down sustainably to 2% is "expected to require a below trend economic growth and some softening in labor market conditions."

He said the Fed's restrictive policy has tightened financial conditions, adding that bank lending standards have tightened and loan growth has slowed sharply.

"Growth in industrial production has slowed and amount spent on residential investment has declined in each of the past five quarters," he noted. "But, we are attentive to signs that economy may not be cooling as expected. So far this year, GDP growth come in above expectations and above its longer-run trend. And, recent readings in consumer spending have been especially robust."

Powell underlined that additional macroeconomic evidence of persistently above-trend growth "could put further progress on inflation at risk and could warrant further tightening of monetary policy."

He said rebalancing of the labor market has continued over the past year but remains incomplete, while labor supply has improved and the labor force participation rate of women in their prime working years reached an all-time high in June.

"Job openings remain high but are trending lower, payroll job growth has slowed significantly, total hours worked has been flat over the past six months, and the average work week has declined to the lower-end of its pre-pandemic range, reflecting a granularization to normal market conditions," Powell said.

Powell concluded by stressing that inflation has become more responsive to labor market tightness, as some uncertainties complicates the Fed's task of balancing its monetary policy of "tightening too much" against the "risk of tightening too little."

Share news on social media

Follow us on social network

President Ilham Aliyev shared post about National Hero Natig Gasimov

President Ilham Aliyev shared post on Armed Forces Day

Azerbaijan, Russia discuss current situation in region

Azerbaijan, Russia explore current state and development prospects of consular cooperation

First day of "By Youth For Youth" International Forum concludes in Shusha

Sabina Aliyeva addresses meeting of OIC ombudspersons in Morocco

Ukraine and Moldova enter formal membership talks with the European Union

® Kapital Bank successfully completed subscription for dollar bonds

Azerbaijani cadet judokas to aim for 'medal rush' at European Championships

Turkish, Armenian foreign ministers hold rare phone call

Shusha hosting International Youth Forum

Youth involvement in major projects essential, says minister

Azerbaijan names U15 wrestling squad for 8th Children of Asia International Sports Games

Azerbaijan’s Green World Solidarity Year in spotlight of US media

Young European Ambassadors highlight importance of COP29 in Azerbaijan

Fund for Support to Azerbaijani Diaspora and Hungarian Turan Foundation eye enhancing cooperation

® Over 700 young people joined the “This Is the Way” social project!

Azerbaijan, Gambia waive visa requirement for holders of diplomatic passports

Nacho Fernandez leaves Real Madrid after more than 2 decades

BHOS students to represent Azerbaijan in US

Cooperation Forum of Azerbaijani NGOs wraps up in Zangilan

Sofia's INSAIT Institute for Computer Sciences and AI Awards Grants to Eight Students to Keep Them in Bulgaria

Fiji Airways crowned best airline in Australia and Pacific for second year

Military Institute named after Heydar Aliyev holds another graduation ceremony

China's Chang'e 6 probe will soon bring samples of the moon's far side to Earth — and scientists are getting excited

Azerbaijan, Turkmenistan discuss progress made on Middle Corridor expansion

Euro 2024: Deutsche Bahn's onboard beer sales double

400 Kenyan police officers depart for Haiti to lead UN-backed mission

“Solidarity Appeal of Azerbaijani NGOs for a Green World” to the President of the Republic of Azerbaijan

Germany: Rare Rothschild giraffe born at Berlin zoo

Fifth volume of the multi-volume work "History. Time. Thoughts" by Professor Irada Huseynova published

Garlic could be a secret weapon to keep down your glucose and cholesterol

Central Bank: $87m worth of demand fully covered at FX auction

WikiLeaks founder Julian Assange stops in Bangkok on his way to a US court and later freedom VIDEO

German TV: “Without your kind cooperation it would not have been possible for us to realise the film…”

Malaysia hosts exhibition about Shusha – pearl of Karabakh

World Bank Approves $150 million to improve primary healthcare services in Sri Lanka

Paris hosts presentation of documentary about Ahmadiyya Jabrayilov - prominent representative of French Resistance Movement

To Her Excellency Madame Nataša Pirc Musar, President of the Republic of Slovenia

Oil prices rise in global markets

Azerbaijani oil price slightly increases

Azerbaijani wrestler into European championships final

33 Greco-Roman era family tombs uncovered in Egypt's Aswan

Spokesperson for US Department of State: We continue to support engagement between Azerbaijan and Armenia

Mattia Zaccagni's last-minute goal brings last 16 ticket to Italy

European Commission says Apple in breach of EU competition rules

Turkish Airlines retains Europe’s best airline title for 9th time

Participants of AZERTAC internship program receive certificates

Azerbaijani female chess player crowned English Chess Champion

AZAL once again named best airline in Central Asia and CIS

Azerbaijan, Kyrgyzstan discuss implementation of joint projects

Zangilan hosts Cooperation Forum of Azerbaijani NGOs

NASA confirms it would fail protecting Earth from an asteroid impact in 14 years

Azerbaijan-Brazil interparliamentary relations discussed

Baku Open 2024 to welcome over 300 chess players

Egyptian Al-Ahram newspaper publishes interview with Azerbaijani ambassador

Princess Anne admitted to hospital after head injury

German Liberals threaten ruling coalition over debt

Kylian Mbappe 'really eager' to play against Poland, says Aurelien Tchouameni, rounds on France critics at Euro 2024

Drinking coffee may lower risk of death from too much sitting

Azerbaijan’s Constitutional Court to review President’s request regarding compliance of parliament dissolution with Constitution

Azerbaijan extends special quarantine regime until October 1, 2024

® Opportunity for micro entrepreneurs to benefit from EDF (SİF) loans via Birbank Biznes

SpaceX completes Falcon 9 double launch day with Starlink mission from Vandenberg Space Force Station

Türkiye’s major crypto exchange BtcTurk hit by cyberattack

Uzbekistan becomes first country to receive World Bank carbon funds after reducing emissions

ANAMA: 946 hectares of territory cleared of mines and UXOs over past week

China's reusable carrier rocket completes first 10-km VTOL test

Junior Azerbaijani boxers make successful start to EUBC European Championships

Italian literary portal publishes verses by outstanding Azerbaijani poetess Mahsati Ganjavi

Fire protection team leaders hold training-methodical session, Defense Ministry VIDEO

Azerbaijani athletes to compete at 8th Children of Asia International Sports Games

Climate Action Forum of NAM Youth Organization wraps up in Baku VIDEO

President Ilham Aliyev offers condolences to Russian President and Head of Dagestan

Fire engulfs battery plant, killing one worker

First Azerbaijani diaspora organization founded in South Africa

BHOS students to study in Portugal

Oil prices down in world markets

To His Excellency Mr. Vladimir Putin, President of the Russian Federation

At least 1,301 people died during Hajj - Saudi Arabia

Switzerland make EURO 2024 last 16 despite draw with Germany

To Mr. Sergey Melikov, Head of the Republic of Dagestan of the Russian Federation

Several killed as orthodox church and synagogue attacked in Russia's Dagestan

BTA to have press clubs in all regional cities in Bulgaria with opening of national press club in Montana on June 24

Trump says he knows who his vice presidential selection will be

Young Azerbaijani badminton players garner four medals in Serbia

8 missing after landslide hits houses in central China

Japanese Emperor Naruhito finally begins delayed UK state visit

New Caledonia pro-independence leader charged

Delegation of Culture Ministry embarks on Germany visit

'Tens of thousands' of NHS patients have their names, dates of birth and private information published online by hackers who demanded £40m ransom after cyber attack on London hospitals

European Forum of Azerbaijani Engineers gets underway in Germany

Georgia waste late chance for win over Czech Repuplic

Everton sign midfielder Iroegbunam from Aston Villa

Thailand extends free insurance coverage for foreign tourists until Year-End

Azerbaijan Army positions in Kalbajar once again subjected to fire

FC Bayern mourns Thomas Wilhelmi

Baku hosts 5th meeting of the Russian-Azerbaijani Expert Council

Ancient pig-like animal shows beginnings of mammalian brain evolution

Azerbaijani wrestlers shine at BRICS Sports Games Kazan 2024