4 days ago
Warsh Keeps Inflation Central, Warns More Fed Action Needed
Kevin Warsh said the Federal Reserve must keep working to control rising prices.
The Fed wants inflation to settle at 2 percent.
Warsh said recent inflation data looked better but did not prove that price increases were slowing enough.
He warned that the Fed may need to take more action if inflation does not move toward its goal.
He did not say what the Fed’s next interest-rate decision would be.
Warsh said the US economy looked strong, with people spending and businesses investing.
He also said the job market was close to full employment.
Finally, he argued that the Fed should avoid making too many promises about future interest rates.
Kevin Warsh said inflation must move toward the Federal Reserve’s 2% target at a sufficient pace.
He said further policy action may be needed if underlying price pressures do not improve adequately.
Warsh described prices as the Fed’s predominant focus and said recent summer readings were not conclusive.
He said the US economy appeared stronger, with healthy consumer spending and rapidly rising business investment.
Warsh criticized routine forward guidance, saying it could limit policymakers’ flexibility as conditions change.
- Who
- Kevin Warsh, chairman of the US Federal Reserve.
- What
- Warsh said controlling inflation remains the Fed’s main focus and that further policy action may be necessary.
- Where
- The Federal Reserve’s annual Jackson Hole symposium in Kansas City, United States.
- When
- Friday, August 28.
- Why
- Because inflation remains above the Fed’s 2% target and recent improvements have not demonstrated that underlying price pressures are slowing sufficiently.
Key facts
- Inflation target
- The Federal Reserve’s firm fixed target is 2%, measured by the Personal Consumption Expenditures price index.
- Policy focus
- Warsh said the Fed’s predominant focus should currently be on prices.
- Possible action
- He said further policy action may be needed if underlying inflation does not move toward the target quickly enough.
- Unemployment rate
- The unemployment rate was reported at 4.1%.
- Economic assessment
- Warsh said business capital expenditure was rising rapidly and consumer spending remained healthy.
- Financial conditions
- He said strong credit markets and relatively easy lending meant conditions could hardly be called restrictive.
- Forward guidance
- Warsh said routine forward guidance had outstayed its welcome in normal times because it could constrain future decisions.
Quotes
Kevin Warsh
Chairman of the US Federal Reserve
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
freepressjournal.in
“I stand here today committed to a discipline, not a decision.”
freepressjournal.in
Sources
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