(Washington) The American central bank (Fed) will certainly have to raise its rates further and keep them at a high level, to bring inflation back to the 2.0% target, one of its officials estimated on Saturday.
“Inflation remains too high and I think it will probably be appropriate for the Committee to raise rates further and keep them at a restrictive level for a period of time in order to bring inflation back to our 2% target,” said Michelle Bowman, a Fed governor, during a speech to bankers in West Virginia.
The Fed’s PCE inflation index stood at 3.5% year-over-year, accelerating again for the second month in a row, driven by rising energy prices.
Another measure, the CPI index, on which pensions are indexed, also started to rise again in August, to 3.7% over one year.
“I see a continuing risk that high energy prices will reverse some of the progress we have seen on inflation in recent months,” Bowman warned.
She noted that “the economy has remained strong”, citing a GDP which has “increased at a sustained pace”, while “consumer spending has remained robust and (that) the real estate sector appears to continue to rebound”.
This solidity could make it possible to further tighten monetary policy, without causing a recession.
As for the job market, the supply and demand for labor seem to be “becoming more balanced”, underlined the governor, after more than two years of a significant labor shortage. work, which caused wages to soar, contributing to rising inflation.
Furthermore, rising rates have led commercial banks to reduce their lending to households and businesses, “but despite this tightening of lending conditions, there has not been a sudden contraction in credit that would significantly slow down the economic activity”, a necessary condition for a lasting decline in inflation, underlined Michelle Bowman.
At its last meeting on September 19-20, the Fed kept its key interest rate in the range of 5.25 to 5.50 percent, the highest level since 2001. Officials, however, signaled that they could raise them again. again by the end of the year.
The next meeting will be October 31 and November 1.