Powell promises that the Fed is “sharply focused” on reducing inflation

Federal Reserve Board Chairman Jerome Powell spoke to reporters after the Federal Reserve raised its target interest rate by three-fourths of a percentage point to stem the devastating jump in inflation during a news conference after a two-day meeting of the Federal Open Market Committee (FOMC). ) in Washington, DC, USA, June 15, 2022.

Elizabeth Franz Reuters

Chairman of the Federal Reserve Jerome Powell reaffirmed the central bank’s commitment to reducing inflation, saying Friday was crucial for the global financial system.

“The Federal Reserve’s strong commitment to our price stability mandate contributes to widespread confidence in the dollar as a means of preserving value. To this end, my colleagues and I are strongly focused on returning inflation to our 2 percent target,” he said. Powell in the introductory part. remarks on a Fed-sponsored conference on the global role of the US currency.

These comments come two days after the Federal Open Market Committee voted to raise the base interest rate by three quarters of a percentage point to the target range of 1.5% -1.75%. Banks use the interest rate to determine the cost of short-term loans they lend to each other, but it also feeds on a variety of consumer products such as credit cards, equity loans and car financing.

Inflation has risen in the last year, with consumer price index in May has grown by 8.6% in the last year.

Fed officials are targeting 2% inflation as healthy for a growing economy, and said they would continue to raise interest rates until prices return to that range.

While inflation harms consumers through the prices they pay at the grocery store and gas pump, as well as many other activities, Powell’s Friday notes focused on his global financial importance.

“Fulfilling our dual mandate also depends on maintaining financial stability,” Powell said. “The Fed’s commitment to our dual mandate and financial stability encourages the international community to hold and use dollars.”

In addition to price stability, the Fed is tasked with maintaining full employment.

Powell cites the importance of the dollar for global funding, noting in particular the importance of vehicles such as the one the Fed introduced in the Covid pandemic that it borrows green money from global central banks in need of liquidity.

He also noted upcoming changes in the global financial system, including the use of digital currencies and payment systems such as FedNow, a service expected to go online in 2023.

The digital currency, as discussed by Fed officials, could help keep the dollar a global reserve currency, he said.

“Looking ahead, rapid changes are taking place in the global monetary system that could affect the international role of the dollar in the future,” Powell added.

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