MADRID, 7 (-)
The president of the Federal Reserve of the United States (Fed), Jerome Powell, has insisted that if the US labor market remains very strong or inflation persists at high levels, “rates will have to be raised more quickly,” he said. said during his speech at ‘The Economic Club’ in Washington.
However, Powell has also stressed that the disinflation process has already begun, “although it will take time”, something he already warned about six days ago, when the Fed agreed to the first rate hike of 2023 up to the target range of 4 .5% and 4.75% and advanced two other increases for this year.
Powell already said then that “reducing inflation will probably lead to a growth rate below average and a cooling of the labor market.” In fact, he has ventured that it will eventually fall to the 2% level in two years.
On the other hand, the central governor has ruled out raising the current 2% inflation target as well as the “trillion dollar coin” solution to dodge the necessary consent of the US Congress to raise the debt limit.
“We are only the fiscal agent,” he recalled. “There is only one solution for this: that Congress vote to raise the spending ceiling so that the United States can meet all its debts,” she summarized.
Although, Powell has clarified that the accumulated liabilities are not so much the problem, but a “long-term unsustainable fiscal policy at the federal level” that would have to be addressed. “And better to do it before than after,” she added.