The dollar and gold market focused on the statements from United States Federal Reserve (Fed) Chairperson Jerome Powell yesterday. Powell, who kept the policy rate at the peak of the last 22 years, gave important messages for further tightening and said they will not hesitate to take the necessary steps until inflation reaches the 2 percent target.
A panel titled "Monetary Policy Challenges in the Global Economy" was held as part of the 24th Jacques Polak Annual Research Conference organized by the International Monetary Fund (IMF). U.S. Federal Reserve (Fed) Governor Powell, IMF First Vice President Gita Gopinath, Bank of Israel Governor Amir Yaron, and Harvard University Economics Professor Kenneth Rogoff participated in the panel.
In his speech here, Powell said that inflation in the U.S. fell over the past year but remained above the 2 percent target. Stating that they are pleased with the progress in question, he emphasized that there is still a long way to go in the process of reducing inflation to 2 percent in a sustainable way.
Powell highlighted that the labor market remains tight, although improvements in labor supply and the gradual decline in demand continue to move the market to a better balance. Pointing out that economic growth was quite strong in the third quarter, Powell said that they expect growth to slow in the coming quarters.
He noted that they are cautious about the risk that stronger growth could damage progress toward restoring balance in the labor market and lowering inflation, which may require a monetary policy response.
Stating that they know that the ongoing progress in inflation towards the 2 percent target is not assured, Powell said that inflation has misled them in the opposite direction several times.
"The Federal Open Market Committee (FOMC) is committed to maintaining a monetary policy stance restrictive enough to bring inflation down to 2 percent over time. We are not sure we have reached such a stance," Powell stated.
"If it is necessary to tighten monetary policy further, we will not hesitate to do so," he added.
Emphasizing that they will continue to act cautiously in a way that will allow them to address the risks of misleading and excessive tightening of several months of data, Powell reiterated that they make decisions from meeting to meeting based on the sum of incoming data and their reflections on economic activity, inflation outlook, and risk balance.
On the other hand, Powell's speech was interrupted by climate activists who suddenly appeared on the stage. Standing arm in arm, the demonstrators chanted "Climate is a systemic risk", "Stop fossil financing" and "Powell, do your job". Powell, who left the hall for a while due to the protest, returned to the hall after the activists were removed by the security guards and continued his speech. Powell's speech at the New York Economic Club in October was delayed due to the action of climate activists.
Source: Anadolu Agency