Powell: There's a long way to go to restore price stability

[areyentiraidhi]

 

[andhra_jp]

Powell says Fed will slow down interest-rate hikes and Inflation fight has "long way to go"

Powell noted that, while the central bank may ultimately raise rates to a higher level than it initially planned, it would do so in smaller increments.

"It is likely that restoring price stability will require holding (interest rates) at a restrictive level for some time," Powell said. "History cautions strongly against prematurely loosening policy."

Some good news on the inflation front, with the cost of goods such as cars, furniture and appliances in retreat. He also said that rents and other housing costs — which make up about a third of the consumer price index — were likely to decline next year.

But the cost of services, which includes dining out, traveling and health care, are still rising at a fast clip and will likely be much harder to rein in, he said.

"Despite some promising developments, we have a long way to go in restoring price stability," Powell said.

While job openings fell in October, there are still about 1.7 open jobs for every unemployed worker who is looking for work, signaling "a real imbalance between supply and demand" for workers.

The lack of workers reflects a jump in early retirements, the death of several hundred thousand working-age people from COVID-19, and a sharp decline in immigration and slower population growth, he said.

"If you're constantly fighting off inflation, and it goes on for five, 10 years, you can't have full employment," he said.

Many economists forecast the Fed's key rate will rise to at least 5% to 5.25%.

https://www.cbsnews.com/news/fed-interest-rate-hikes-slow-jerome-powell-brookings/?ftag=CNM-00-10aab7e&linkId=191873616

 

[andhra_jp]

US jobs growth signals tough inflation fight ahead

Employers added 263,000 jobs, while average hourly pay rose 5.1% from last year, official figures show.

The unemployment rate remained at 3.7%.

The stronger than expected report came despite the US central bank's efforts to cool the economy and stabilise prices by raising interest rates.

But while reports of job cuts have started to hit some sectors, such as housing and technology, Friday's report from the US Labor Department suggests the labour market remains solid.

Bars, restaurants and health care firms drove the hiring in November. Job gains were seen even in sectors expected to take a hit, such as construction and manufacturing.

Analysts said that may be good news for workers, given fears that the rising borrowing costs could trigger a painful increase in unemployment.

But they said the strong wage growth will continue to put upward pressure on prices, suggesting the Federal Reserve will keep increasing interest rates in the months ahead.

"We still think a moderation in wage growth is a good bet, but only because we expect payrolls to soften markedly in the first quarter, as a result of both slower gross hiring and rising layoffs," said Ian Shepherdson of Pantheon Macroeconomics.

https://www.bbc.com/news/business-63837368