(Finance) – “The FOMC is strongly committed to reducing inflation to 2% over time and to maintaining a restrictive policy until we are sure that inflation is on track towards that goal. It would premature conclude with confidence that we have achieved a sufficiently restrictive orientation, or speculate on when policy might ease. We are ready to further tighten the policy if this proves appropriate.” He said this Jerome Powellpresident of the Federal Reserve, in a speech in Atlanta (Georgia).
“The strong actions we have taken have moved our policy rate well into restrictive territory, meaning that restrictive monetary policy is putting downward pressure on economic activity and inflation,” he explained. “It is believed that the policy monetary policy influences economic conditions with a certain lag, and probably full effects of our tightening have not yet been felt“.
Furthermore, “the forceful response” to inflation “helped preserve the Fed’s hard-won credibility by ensuring that public expectations about future inflation remained well anchored,” he said, adding that “having come this far so rapidly, the FOMC is proceeding with caution, as i risks of tightening and excessive tightening are becoming more balanced“.
On the path of inflation he noted that “over the six months ending in October, core inflation stood at an annual rate of 2.5% and, while the lower inflation data in recent months is welcome, such progress must continue if we want to reach our 2% target.”
Regarding employment, he said that “the Labor market conditions remain very solid and the economy is returning to a better balance between supply and demand of workers”, “the pace at which the economy is creating new jobs remains strong and is slowing to a more sustainable level”, with this gradual slowing that ” It is due in part to the Fed’s efforts to slow the economy’s growth to help reduce inflation.”