Powell (Fed) affirms that inflation "is on the right track" and defends "prudence" in monetary policy

MADRID, 1 Dic.

Powell (Fed) affirms that inflation "is on the right track" and defends "prudence" in monetary policy


The president of the United States Federal Reserve (Fed), Jerome Powell, stated this Friday at an event at Spelman College in Georgia that inflation is "on the right track" and has stressed the importance of acting with "prudence." "in monetary policy.

"Inflation is still above our target, but it's on the right track. So we think the right thing to do now is to move cautiously, think carefully about how events unfold, and let the data speak for itself," Powell indicated after mentioning that the most recent information points to underlying inflation, that which discounts the impact of food and energy due to their greater volatility, which is growing "around 2.5%."

The head of the North American issuing institute has assured that the rapid cycle of increases undertaken has weighed on economic activity given its restrictive nature. However, he also added that said hardening is expressed "with a delay" and, probably, its effects "have not yet fully manifested themselves."

However, the Fed's response to the escalating cost of living has served to maintain both the credibility of the institution and the "inflation expectations of economic agents well anchored."

Powell has reiterated that the Fed remains "very committed" to reducing inflation to 2% over time, for which a restrictive policy will have to be maintained until price increases are on a path converging with said objective. "It would be premature to assume or speculate that we have reached a sufficiently restrictive tone," he summarized.

In fact, the president of the Fed has also recalled that rates will be raised again if necessary, but that decisions are made meeting by meeting taking into consideration "all the data and its implications for economic activity and inflation, as well as for the balance of risks".

As for the future, Powell has advanced that the labor market "remains vigorous" and that it will slow down to create jobs at "more sustainable levels."

Powell has indicated that consumption has been "very strong" thanks to pent-up demand during the pandemic, but that this phenomenon may be running out due to the rise in the use of credit cards and delinquencies.

Likewise, he explained that the GDP for the third quarter probably had a "very, very solid" mark, although he believes it will moderate, although he admitted that the data available "is still limited."

On the other hand, Powell has referred to artificial intelligence (AI) to maintain that we are in the early stages of the application of this technology, so there is "a lot of uncertainty" about whether it will help create jobs in net terms or destroy them. .