Fed’s Cook takes a dovish stance on raising rates
2022.11.30 13:15
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Fed’s Cook takes a dovish stance on raising rates
Budrigannews.com – Central bank Lead representative Lisa Cook said on Wednesday it could before long be the ideal opportunity for the U.S. national bank to take its foot off the gas with regards to its endeavors to bring down elevated degrees of expansion.
Cook stated in prepared remarks for a speech to the Detroit Economic Club that inflation “remains much too high” and that “as a result, the Federal Reserve must continue to focus on bringing inflation back down to our 2% target.”
Having said that, Cook argued that this year’s extremely rapid rises in Fed interest rates provided the central bank with some breathing room to assess the economic impact of its policies.
She stated, “Given the tightening that is already in the works, I am aware that monetary policy works with long lags.” She stated that “it would be prudent to move in smaller steps” as the Fed approaches an “uncertain” stopping point for its rate rises, and that “how far we go, and how long we keep rates restrictive, will depend on observed progress in bringing down inflation.”
Cook spoke two weeks before the Fed’s next policy statement is scheduled to be released. This year, the central bank has quickly raised its short-term target rate from close to zero in March to the current range of 3.75 percent to 4.0%.These increases have been historically aggressive, increasing by 75 basis points every summer.
However, Fed officials have stated in recent statements and other communications that they should slow down as they approach a final destination for rate increases. Futures markets are currently anticipating a half-percentage-point rate increase during the policy meeting on December 13-14, and Fed officials have not yet refuted that possibility.
Cook, one of the Fed’s newest governors, stated that “we have begun to see some improvement in the inflation data” in her remarks. However, she also stated that she “would be cautious about reading too much into one month of relatively favorable data” before concluding that the high price pressures that have compelled the Fed to act are diminishing.
Cook stated that the current rate of wage increases exceeds the Fed’s target of 2% inflation. She also stated that the manufacturing sector in the United States is healthy and that although U.S. productivity levels are low, she hopes they will rise over time.
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