Powell, at a conference in Amsterdam, admitted that his belief that inflation will subside “is not as high as before” because price increases have been maintained in the first three months of the year.
Powell emphasized that the US Central Bank’s strategy is to keep rates where they are now, at a two-decade high, and not raise them for the moment.
“I don’t think it’s likely, based on the data we have, that our next decision will be a rate increase,” Powell said. “I think we will most likely keep the rate where it is.”
Financial markets and economists are waiting for signs that the central bank will cut interest rates once or twice this year, but the odds are getting further away.
Has inflation really decreased in the US?
Americans do not believe it, they continue to pay very high prices since April 2022.
Regarding the announcements that inflation has decreased sharply from the peak it reached in 2022, honest and independent economists consider that the figures offered by Joe Biden’s government do not match the reality suffered by American consumers.
With price increases still intense, Powell and other Fed officials have indicated that a rate cut is unlikely for now.
Powell spoke hours after the US government issued a report that wholesale inflation rose in April.
This Wednesday, the government will issue its consumer inflation report, which is expected to show that price increases eased slightly last month.
In his comments Tuesday, Powell downplayed the wholesale inflation report, which also showed that some price increases eased last month, such as those for airline tickets, hospitalizations and auto insurance.
“I wouldn’t call it hot,” Powell said in reference to wholesale inflation. “I would call it mixed.”
Vehicle prices
Economists are divided over whether this year’s high inflation reflects a reacceleration in prices or is rather a consequence of economic distortions caused by the Biden administration’s misguided policies.
Auto insurance, for example, increased 22% compared to a year ago, and it could also be due to specific factors in the automobile industry: the prices of new vehicles have risen sharply since Biden came to the White House due to the shortage of semiconductors and parts after severe delays in the unloading of ships at ports due to lack of labor in the US.
Factories in Asia were also closed for months or limited to work capacity due to restrictions during the pandemic, which caused major delays in orders.
Insurers are now also trying to offset higher repair and replacement costs by increasing policies.
Source: With information from AFP.
