fbpx
Open Society Foundations (OSF) Award $1.1 Million Grant to Afrobarometer to Spur Future GrowthRead more The annual Global Impact Conference 2022 brings together visionary business leaders to revolutionize educational systems and inspire collaborative actionRead more APO Group announces content partnership with Pan-African broadcaster VoxAfricaRead more MainOne, an Equinix Company’s MDXi Appolonia Achieves Tier III Constructed Facility certification (TCCF), Now Most Certified Data Center in GhanaRead more United Nations High Commissioner for Refugees (UNHCR) warns rising tide of hunger, insecurity, and underfunding worsening gender-based violence risksRead more The Royal Thai Embassy presents the cultures of Thailand at the Association of Southeast Asian Nations (ASEAN) Festival in KenyaRead more Climate change is the biggest global threat, young people in Africa and Europe tell European Investment Bank (EIB), Debating Africa and Debating EuropeRead more $2 million in prizes awarded at Conference of the Parties (COP27) to African youth-led businessesRead more Africa and Europe’s top business and public sector leaders gather to chart Africa’s economic rebirthRead more The Thai delegation’s active participation at the 145th Assembly of the Inter-Parliamentary Union (IPU) in KigaliRead more

Bringing down inflation will take time, more rate hikes: Fed officials

show caption
Federal Reserve officials have been consistent in their message that more interest rates hikes will be needed to bring down inflation, and the process will take time./AFP
Print Friendly and PDF

Oct 07, 2022 - 08:54 AM

WASHINGTON — The United States will require further interest rate hikes in order to cool the world’s largest economy and rein in high prices, Federal Reserve Governor Lisa Cook said Thursday.

As US annual inflation has soared to the fastest in 40 years, the Fed has moved aggressively this year to tamp down demand, raising the interest rates five times, for a total of three percentage points.

And the central bank has said more increases are likely to come this year.

“Inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad-based,” Cook said in her first speech as a member of the US central bank’s board.

Prices have surged over the past year, partly due to global supply chain problems that created shortages of key parts such as semiconductors needed for cars and electronics, as well as a shortage of workers.

The situation was exacerbated with Russia’s invasion of Ukraine in February — spurring a surge in energy prices and affecting global food markets — along with China’s adherence to a strict zero-Covid policy.

While the Fed cannot act directly on supply, it can moderate demand by tightening monetary policy, Cook said in the appearance at the Peterson Institute for International Economics.

“We will keep at it until the job is done,” she said.

No ‘meaningful progress’ 

Her fellow Fed board member Christopher Waller warned that given ongoing price pressures, including from the US housing market, inflation is “not likely to fall quickly.”

“We haven’t yet made meaningful progress on inflation, and until that progress is both meaningful and persistent, I support continued rate increases,” Waller said in a speech Thursday.

Both officials expressed concern about the widespread and persistent forces pushing up prices and said the Fed must remain focused on that threat.

“Restoring price stability likely will require ongoing rate hikes and then keeping policy restrictive for some time until we are confident that inflation is firmly on the path toward our two percent goal,” Cook said.

Waller said that in addition to likely increases in November and December, “I anticipate additional rate hikes into early next year.”

He also downplayed speculation that sharp movements in financial markets might cause the Fed to ease off its aggressive stance.

“This is not something I’m considering or believe to be a very likely development,” he said, noting that “markets are operating effectively” and the Fed has tools to address any strains.

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.