Powell announced temporary disinflation in U. S.
2023.02.07 14:10
Powell announced temporary disinflation in U. S.
By Kristina Sobol
Budrigannews.com – Jerome Powell, Chairman of the Federal Reserve, reiterated on Wednesday that inflation was slowing down, but he also reiterated the need for additional hikes because the mission to bring inflation down to the target of the central bank still has a long way to go in the midst of a hot labor market.
“We didn’t expect [the January jobs report] to be this strong, but it shows you why we think that this will be a process [to bring down inflation] that takes a significant period of time because the labor markets are extraordinarily strong,” Powell said to the Economic Club of Washington on Wednesday, reiterating the need for ongoing rate hikes. “We didn’t expect [the January jobs report] to be this strong.”
Powell added that the Federal Reserve is attempting to “achieve a single policy that is sufficiently restrictive, to bring inflation down to 2% over the course of time and we don’t think we’ve achieved that yet.”
However, the head of the Fed stated that it was “good” that inflation was beginning to fall without harming a robust labor market.
The economy added 517,000 jobs in January, according to the red-hot jobs report from last week, but the unemployment rate fell to a level not seen in more than four decades.
However, investors have been forced to price in the possibility of a more hawkish Fed due to the strength of the labor market. After abandoning its wager on a Fed pause beginning in March, IMorgan Stanley stated that the jobs data from last week, including revisions, suggest that an “acceleration in rate hikes cannot be ruled out.”
According to Investing.corn’s Fed Rate Monitor Tool, expectations for a rate increase in March are close to being fully priced in, and the odds of a rate increase in May increased from 38% last week to 69%.
In accordance with the Fed’s projections made in December, two additional rate increases would bring the Fed funds rate to a range of 5% to 5.25 percent, or 5.1% at its midpoint.
