The US Federal Reserve seems to be strongly committed to getting inflation under control. The US regulator is not going to slacken its pace of monetary policy settings and is currently preparing for another increase in the key interest rate.
During his speech at the National Association of Business Economics conference, Fed Chair Jerome Powell said that rate hikes could go from the traditional 25 basis point moves to more aggressive 50 basis point increases if necessary. Further monetary policy tightening is essential to curb surging inflation. Rising energy prices are fanning inflation. Thus, consumer prices soared by 7.9% year-on-year in February, while inflation excluding food and fuel prices, a key focus for policymakers, rose by 5.2% in January.
“We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well,” Powell said.
According to Stock Traders Daily CEO Thomas Kee, the Fed is more afraid of accelerating inflation than a slowdown in economic growth and the weakening of the labor market. The regulator has declared open war on high inflation and is unlikely to stop in the near future, he noted.
