March 4, 2022
By Jonnelle Marte
(Reuters) – Russia’s invasion of Ukraine adds uncertainty to US economic outlook and could boost inflation in the short term, but household savings and strong economic growth will help reduce the damage, the Fed chairman said on Thursday. of New York, John Williams.
Higher oil prices resulting from the crisis may act as a “tax” for American consumers that cuts spending, but the economies that accumulate during the pandemic may help offset higher costs, Williams said.
“The economy is getting into it with great momentum,” Williams said during a virtual event hosted by the Economic Education Council. “It certainly is not a matter of stagnation.”
Fed officials say they plan to start raising interest rates during their March 15-16 meeting, a key step in their efforts to fight inflation above the 40-year high.
Williams said he expects inflation to fall later this year, but will remain “well above” the central bank’s 2% target. Inflation should be moderated as the Fed raises interest rates, fiscal policy weakens and supply shortages are addressed.
However, he stressed the Fed’s ability to respond if inflation remains higher than expected at the end of this year and beyond.
“We have the ability to adjust interest rates higher if inflation ends up being much more persistent or staying much higher than we expect or want,” Williams said.
(Report by Jonnelle Marte · Edited by Sandra Maler and Leslie Adler)
NY Fed Williams says the US economy is not in a stagnant inflation scenario
Source link NY Fed Williams says the US economy is not in a stagnant inflation scenario