(Washington) The American central bank (Fed) will raise its rates and maintain a restrictive monetary policy until inflation is in the process of slowing down, said Thursday Lisa Cook, a governor of the Fed, who pronounced her first speech since taking office.
Posted at 1:42 p.m.
“Restoring price stability will likely require continued rate hikes and then maintaining tight policy for some time until we are confident that inflation is firmly on track to our 2 %,” said M.me Cook, during an online keynote with the Peterson Institute of International Economics (PIIE).
“Inflation is too high, it needs to come down, and we will continue until the job is done,” she added.
Inflation slowed to 6.2% in August year on year, according to the PCE index, favored by the Fed. Over one month, however, prices started to rise again, by 0.3%.
The Fed is targeting 2% inflation over one year. To achieve this objective, it has been gradually raising its main key rate since March in order to slow the economy.
The latter, which was between 0.00 and 0.25% until March, is now in a range of 3.00 to 3.25%.
Faced with the persistence of high inflation, the Federal Reserve resorted to hikes much faster than usual, by half a percentage point and even three quarter points, instead of the usual quarter point .
This allows monetary restrictions to be put in place “more quickly to reduce demand when supply is limited” and can also “contain inflation expectations and, therefore, influence wage-setting behavior and prices,” she added.
She believes that “this preventive approach is appropriate”, because “even if bringing down inflation will cause difficulties, a failure to restore price stability would make it much more difficult and much more painful to restore it in the future”.
“Policy must remain focused on restoring price stability, which will also lay the foundations for a strong and sustainable labor market,” she warned.
September’s unemployment rate will be released on Friday. It is expected to be stable at 3.7%.
Lisa Cook is the first black woman to serve as a governor of the US Federal Reserve.
Former economic adviser to President Barack Obama at the White House, she took office on May 23.