US inflation fight to go on ‘as long as it takes:’ Federal Reserve vice-chair

Published Thu, Sep 8, 2022 · 06:58 AM

THE US central bank will stay the course on its aggressive fight against high inflation for “as long as it takes” to bring prices down, a top Federal Reserve official said on Wednesday.

Echoing comments from other leading policymakers, Fed Vice-Chair Lael Brainard highlighted the message that the central bank has no plans to pivot or lower interest rates any time soon.

American families have been struggling with inflation at its fastest pace in more than four decades, exacerbated by supply chain woes, Covid lockdowns in China and surging petrol prices due to Russia’s war in Ukraine.

The Fed this year has increased the benchmark lending rate four times, including two massive three-quarter point hikes, with another possible later this month.

“We are in this for as long as it takes to get inflation down,” Brainard said in a speech prepared for delivery to a conference in New York, as she acknowledged that the pain of high prices is felt more severely by lower income families.

Some in financial markets had latched onto signs of easing supply snarls and modest tapering of prices to bet the Fed would soon begin to pull back on its efforts and perhaps even cut rates next year.

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But Brainard’s comments added more cold water to those hopes. The rate “will need to rise further” and “policy will need to be restrictive for some time to provide confidence that inflation is moving down to target,” she said.

Reaffirming recent comments from Fed Chair Jerome Powell, Brainard stressed the need “to avoid the risk of pulling back too soon.”

“While the moderation in monthly inflation is welcome, it will be necessary to see several months of low monthly inflation readings to be confident that inflation is moving back down to 2 per cent,” she said. AFP

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