The head of the US Federal Reserve allowed fluctuations in inflation above the target 2%

Inflation in the country is driven by expectations of a new package of support for the economy, which will amount to $1.9 trillion.

The US Federal Reserve intends to keep inflation at around 2% until the labor market fully recovers, although it may reach higher levels before that. This was stated on Thursday by the US Federal Reserve chairman, Jerome Powell, in an interview with The Wall Street Journal.

“We expect to use the tools at our disposal to keep inflation at 2%,” he said.

Inflation in the United States is driven by expectations of a new package of support for the economy, which will amount to $1.9 trillion. However, its growth will lead to higher interest rates on loans, depriving businesses of access to “cheap money” and complicating the economic recovery. According to investment bank Freddie Mac, interest on 30-year mortgages has already reached an average of 3%, which was the highest rate since July last year. Concerns about rising credit prices are already weighing on the growth of exchanges after a period of record growth in February.

Powell added that he does not expect the US labor market to return to pre-pandemic levels this year, so measures to contain inflation will continue for a long time. “We still have a long way to go to achieve these goals,” he added.

At the same time, the Federal Reserve head noted that until the economy recovers, inflation will exceed the target 2% at some points. “These are temporary spikes, and they are inevitable. As enterprises resume their work, demand will grow, and this will also lead to an increase in inflation,” he said.

Earlier, Powell said that the Fed intends to reduce the unemployment rate to 3.5%, as it was before the pandemic, while now it is 6.3%.

Author: Steve Cowan
Graduated From Princeton University. He has been at the Free Press since October 2014. Previously worked as a regional entertainment editor.
Function: Chief-Editor
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