US seeks alternatives to tighten monetary policy

The head of the Fed assured that there are ways for the US not to enter an economic recession

The president of the United States Federal Reserve (Fed), Jerome Powell, assured that there are ways for the agency to tighten monetary policy without plunging the country into a recession.

At an event organized in Portugal by the European Central Bank (ECB), the Fed’s commission stressed that “there are no guarantees that they can achieve it”, but that there is hope for the US to close the year with positive growth.

Powell explained that the dynamics of inflation have been profoundly altered by the pandemic. Since monetary policy cannot affect supply problems, the Fed’s goal is to “moderate growth” and thus achieve a “necessary adjustment” for consumption to match available supply.

In any case, the president of the Fed said that there are “paths” to return inflation to 2 %, although in any case these paths “have shrunk.”

Powell reaffirmed that the Fed is committed to using all its tools to lower inflation, and that to achieve this they will necessarily have to lower the country’s growth. “Is there a risk that we go too far? Yes, there is. But the biggest risk to the economy would be to fail to restore price stability.”

K. Tovar

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Source: La Tercera

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