New York Fed president targets 2 percent inflation by 2022

(ABM FN-Dow Jones) President John Williams of the Federal Reserve in New York does not expect the recent rise in US inflation to continue. He said this in a digital speech on Monday.

By next year, inflation will have fallen from current levels, according to Williams, who confirmed the Fed is in no rush to raise interest rates.

According to Williams, the US economy is showing “solid momentum” and a tapering of the bond-buying program will soon be “probably justified”.

The Fed is currently buying $120 billion a month in bonds to keep interest rates low. Last week, the Fed hinted that it will announce plans to scale back its asset purchase program in November.

Williams warned Monday that the disruptions caused by the corona crisis are still affecting the US economy. He does not expect these problems to be solved in the short term. The New York Fed president pointed to persistent deficits, which are currently driving high inflation. Companies are spending more money on wages and materials, which leads to higher prices for various products.

In July, inflation in the US was still 4.2 percent. This is significantly more than the 1.8 percent that the Fed was still counting on at the beginning of the year. While inflation is now well above the 2 percent target, Williams expects price pressures to ease as the coronavirus crisis continues to slide into the background. However, he acknowledged that the outlook remains uncertain, which means that Williams could not say exactly when inflation could fall back to two percent. “This process could take up to a year,” the Fed president said.

Bron: ABM Financial News–

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