World, As Seen from the most beautiful islands: Ireland and Cyprus

More rate hikes in sight as inflation stays high and unemployment is low


Inflation in the US is still too high. The Federal Reserve is ready to raise interest rates further if necessary. That was the message of US Federal Reserve Chairman Jerome Powell at the Jackson Hole meeting. But Chairman Powell also said that the Fed is “proceeding cautiously” in deciding whether to raise interest rates.

Financial markets had been waiting for Chairman Powell’s speech for a long time, hoping to find more clues about the Fed’s future monetary policy.

Chairman Powell acknowledged that the momentum in price increases has weakened and expressed his satisfaction with this. This is because the supply-demand bottleneck in commodities caused by the COVID-19 pandemic is slowly dissipating. He cited the automobile sector as an example.

Interest rates may become an increasingly important tool to achieve the desired 2% inflation level. Higher interest rates reduce the inflow of funds into the economy, which theoretically suppresses inflation. This is why the Fed and other central banks have been raising borrowing costs rapidly over the last 18 months.

In his speech, the Fed Chairman noted that this policy has led to lower growth in industry and other sectors. At the same time, however, it also appears that the economy has not cooled as much as expected. Chairman Powell said that ‘further signs of exceptionally strong growth could put further progress on inflation at risk’. Also, the labour market remains tight, which could lead to higher wages and thus stronger price growth.

Analysts see few major surprises in the speech. ‘The bond market is not convinced of another rate hike, especially in relation to the September meeting. Chairman Powell’s long-awaited speech offered no new information, merely reiterating that the Fed is committed to bringing inflation down to 2%.

Written by: Patrick O'Brien

Patrick O'Brien is a student who is taking only the first steps in journalism. The main interest is events from the world of macroeconomics and finance.

Add comment

World, As Seen from the most beautiful islands: Ireland and Cyprus

From Trinity st. to Limassol, Cyprus

Ireland and Cyprus have one thing in common. The most beautiful islands are divided. Even proportions are strikingly similar. Both nations strive for unity and a good glass of the news. More about us under the link.

Contact us

Feel free to give us a tip: [email protected]

Recent Posts