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Added on the 27/08/2021 17:28:36 - Copyright : AFPTV - First images
The US Federal Reserve is prepared to raise interest rates higher -- and hold them there -- in order to bring down elevated inflation. "We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective," says Jerome Powell in a central banking conference in Wyoming. SOUNDBITE
Though US inflation is rising, a temporary spike above two percent will not be enough to make the central bank pull back on stimulus policies, says Federal Reserve Chair Jerome Powell. SOUNDBITE
Inflation may be rearing its ugly head in the US economy sooner than predicted. According to Business Insider, a recovery of the US's hardest-hit businesses could drive a faster-than-expected rebound for inflation. The US Federal Reserve aims to reach inflation of at least 2% before considering lifting its benchmark interest rate. However, price growth has trended below that level for years and fell further at the start of the pandemic. Kansas City Fed President Esther George said Tuesday that struggling industries could be placing outsized downward pressure on inflation. She added that a swift economic reopening could see businesses in travel and hospitality could rapidly bounce back--thereby driving inflation higher.
Fed Chair Jay Powell warned on Tuesday that the US economy would suffer if another stimulus package isn't passed, which remains stalled in Congress. House Democrats passed a $2.2 trillion stimulus plan earlier this month, but Sen. Majority Leader Mitch McConnell (R-Ky.) called the amount 'outlandish.' Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Jay Powell Chair, US Federal Reserve But according to Business Insider, White House economic advisor Larry Kudlow said Sunday that he doesn't agree with that assessment. We are in a strong rebound. Businesses are reopening. We are learning to deal with the virus in a targeted, safe, prevented way. White House Economic Adviser Larry Kudlow Interview, CNN's 'State of the Union'
It's a week of central bank gatherings with the U.S. Federal Reserve, Bank of England and Bank of Japan all set to meet. Investors and policymakers will be preparing for the rapidly approaching U.S. presidential election, as well as continuing concerns about the pound. As Ciara Lee reports, there are plenty more third quarter results too.
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