English
US Federal Reserve Chairman in New York Inflation is very high but heading down
The head of the US Federal Reserve in New York, John Williams, said Thursday that inflation is still very high, but he is confident that it will begin to slow later this year.
With markets nervous about the direction of monetary policy, Williams has not given any clear signals on which direction he leans in terms of potential interest rate cuts. Instead, he reiterated the central bank's recent stances that it had seen "no further progress" towards its targets as inflation readings have been mostly higher than expected this year.
Williams said in statements at the Economic Club of New York: “As the economy improves to a better balance over time and the decline in inflation occurring in other economies reduces global inflationary pressures, I expect inflation to resume moderation in the second half of this year.”
He continued, "But let me be clear, inflation is still above our long-term target of 2%, and I am very focused on ensuring that we achieve the goals of our dual mandate."
For nearly a year, the Fed has remained in a holding pattern, keeping its benchmark interest rate on borrowing in a range of 5.25% to 5.5%, the highest level in more than 23 years.
The US economy grew at a slower pace in the first quarter than initially reported, reflecting weaker than expected consumer spending.
Bureau of Economic Analysis figures released Thursday showed that gross domestic product rose 1.3% year-on-year in the first three months of the year, lower than the previous estimate of 1.6%. The economy's main growth engine, personal spending, increased by 2.0%, versus the previous estimate of 2.5%.
In terms of inflation, the measure most closely followed by the US Federal Reserve, the personal consumption expenditures price index, rose at an annual rate of 3.3% in the first quarter, a slight decrease from initial expectations. Excluding food and energy, the core personal consumption expenditures index rose 3.6%, compared to the previous estimate of 3.7%.
