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Fed in no rush to raise interest rates, despite inflation fears

2021-03-02T20:49:27.008Z

The US Central Bank (Fed) has no plans to tighten monetary policy anytime soon, one of its governors, Lael Brainard, said on Tuesday, who expects inflation, which worries consumers. markets and some economists, is only temporary. Read also: Inflation fuels the discontent of the Russians "We will have to be patient to achieve the goals we have set for ourselves , " said Lael Brainard during a vir



The US Central Bank (Fed) has no plans to tighten monetary policy anytime soon, one of its governors, Lael Brainard, said on Tuesday, who expects inflation, which worries consumers. markets and some economists, is only temporary.

Read also: Inflation fuels the discontent of the Russians

"We will have to be patient to achieve the goals we have set for ourselves

,

"

said Lael Brainard during a virtual conference organized by the Council on Foreign Relations.

"We are committed to maintaining our policy (...) until, not only, inflation has reached 2% (annual inflation target, editor's note), but also that it is on the way to exceeding moderately the 2% for a while, ”

she detailed.

The governor of the Fed thus addressed the many observers, especially in the markets, who believe that the Fed will raise its overnight interest rates - which are from 0 to 0.25% - earlier than expected to make facing inflation expected from spring.

“A temporary rise in inflation seems more likely than a lasting change”

in trend, tempered Lael Brainard.

"Even when the economic situation justifies an increase (in rates), the changes will have to be gradual,"

she insisted.

Achieve near full employment

She also clarified that

"asset purchases should remain at least at the current rate until substantial progress has been made to meet our targets."

And if inflation were to be too high and too long-lasting,

"I will not hesitate to act and I think we have the tools"

to face it, she assured, as the president had done recently. from the institution, Jerome Powell.

Read also: US economy: the Fed minimizes the risk of overheating

The monetary policy implemented by the Fed should make it possible to achieve near-full employment and inflation of around 2%.

But inflation should be high from the spring, driven by public aid, the resumption of economic activity linked to the vaccinations in progress, but also because of the comparison with March and April 2020, when prices had fallen.

The Fed said in August that to meet its inflation target, it could tolerate price hikes above 2% for some time, without immediately raising interest rates.

This could indeed have a negative effect on employment, by slowing down consumption and therefore the economy.

Source: lefigaro

All business articles on 2021-03-02

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