Washington DC [US], April 17 (ANI): US Federal Reserve Vice Chair Philip N Jefferson believes it will be appropriate to maintain the current restrictive monetary policy stance, to align inflation with 2 per cent.
Speaking at the International Research Forum on Monetary Policy on Tuesday, he noted that the outlook is still quite uncertain.
If incoming data suggests that inflation is more persistent than he currently expects it to be, maintaining restrictive policy will be needed, he asserted.
“I am fully committed to getting inflation back to 2 per cent,” he said in his speech.
“My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labour market will remain strong, with labour demand and supply continuing to rebalance.”
The latest data showed inflation in the US increased more than expected in March, putting cold water to hopes of an interest rate cut shortly.
In the 12 months through March, the inflation increased 3.5 per cent year-on-year, the highest in about 6 months. This followed a 3.2 per cent rise in February.
“While we have seen considerable progress in lowering inflation, the job of sustainably restoring 2 per cent inflation is not yet done,” the Fed Vice Chair noted.
The US Federal Reserve, in its March meeting, voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the fifth straight time on the trot.
Rating agency Moody’s believes an interest rate cut during the US Federal Reserve’s June meeting is likely off the table given stubborn inflation in the country.
During the COVID-19 pandemic, the interest rates were near zero. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Coming to the growth in the US, the Fed official said real GDP growth in the fourth quarter of 2023 was 3.4 per cent, and he expects first-quarter economic growth to slow down but remain solid as indicated by the solid growth in the latest retail sales. (ANI)
