FedEx Establishes Direct Presence in Nigeria to Support Customers with International TradeRead more 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

Fed rate hikes’ effect on inflation may take longer, says vice chair

show caption
AFP Photo
Print Friendly and PDF

Oct 11, 2022 - 02:27 AM

ANKARA (AA) – The vice chair of US Federal Reserve said Monday that the effect of interest rate hikes on high inflation may take longer than anticipated.

The moderation on the demand side due to the Fed’s aggressive monetary tightening “is only partly realized so far,” Lael Brainard said in a speech at the 64th National Association for Business Economics annual meeting in Chicago.

“We are starting to see the effects in some areas, but it will take some time for the cumulative tightening to transmit throughout the economy and to bring inflation down,” she added.

Brainard said the Fed’s tighter monetary policy is mostly being seen in highly interest rate-sensitive sectors, such as housing, where house price appreciation has fallen sharply in recent months.

“In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer. The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy,” she said.

Charles Evans, head of the Federal Reserve Bank of Chicago, said earlier Monday that the Fed could bring inflation down “relatively quickly” while also avoiding a recession – called a soft landing – adding: “The consensus baseline is projecting a large decline in inflation over the next year and a half.”

The Fed has increased its benchmark interest rate a total of 300 points since March in order to lower inflation, which is still hovering around a four-decade high of above 8% – far from the central bank’s 2% goal.

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.