US interest rates, already at a 22-year high, need to rise further as inflation remains above tolerable level for the average American, Federal Reserve Governor Michelle Bowman said on Monday
WASHINGTON (Pakistan Point News / Sputnik - 07th August, 2023) US interest rates, already at a 22-year high, need to rise further as inflation remains above tolerable level for the average American, Federal Reserve Governor Michelle Bowman said on Monday.
"We have made progress in lowering inflation over the past year, but inflation is still significantly above the FOMC's two percent target, and the labor market continues to be tight, with job openings still far exceeding the number of available workers," Bowman said, referring to the US central bank's policy-making Federal Open Market Committee. "I expect that additional increases will likely be needed to lower inflation to the FOMC's goal."
The United States is to release on Thursday its July reading for the key Consumer Price Index (CPI), which will show how much further the Fed has to go with raising interest rates.
The CPI, which rose by 3% year-on-year in June for its smallest growth in two years, is expected to have seen a slightly more aggressive expansion of 3.3% in July. The Fed's target is 2% per year.
The Fed has identified runaway jobs growth and correspondingly higher wages - as well as trillions of dollars of relief spending over the 2020 coronavirus outbreak - as among reasons for inflation hitting 40-year highs of more than 9% a year in June 2022. While the pandemic spending is over, jobs and wage growth have continued to fuel inflation, prompting the Fed to keep adding to interest rates.
Since March 2022, the Fed has hiked rates by 525 basis points from a previous 25. Its next decision on interest rates is on September 20.
