Challenging Task: Reaching 2% Inflation in America

A Federal Reserve spokesman warned on Friday that the high inflation that has hit America since the start of the year could prolong the Federal Reserve’s ongoing struggle with rising prices.

“There are many tasks before the central bank that it must complete in the course of fighting inflation, if the data show that the economy remains strong and inflation slows down.

The Fed has raised its benchmark lending rate 9 times, a big jump since March 2022, as part of efforts to bring historically high inflation down to around 2%.

But recent turmoil in the banking sector, sparked by the collapse of the Silicon Valley bank, amid worries about its exposure to interest rate risk, prompted the Fed to reconsider a larger hike in March, opting for a quarter percentage point lower hike instead.

Lisa Cook noted that the path to return inflation to 2% is long and likely to be bumpy and difficult.

She noted that core inflation, which excludes food and energy price volatility, remains above the level the Fed is aiming for.

She added: “The inflation picture is now less subdued than at the beginning of the year, but overall the incoming data points to higher inflation this year and stronger economic growth.”

Source: Sputnik