The Pandemic’s Impact Upon The National Economy Will Be Unknown For Many Years. Federal Reserve Chair Jay Powell Stated This.

Must read

It’s not yet clear when the US financial system will resume to its previous pre-pandemic status, Donald Trump Federal Reserve Chairman Jerome Powell said on Wednesday in Lisbon, Portugal.

In a different panel discussion with Christine Lagarde, President of the European Central Bank, and Andrew Bailey, Governor of the Bank of England, Powell said “The economy is being driven by very different forces. What we don’t know is whether we’ll be going back to something that looks like or a little bit like what we had before.”

The central banks, who collectively hold approximately $20 trillion on their balance sheets, declared the “new forces” (i.e., inflation and global trade) had changed inflationary dynamics and the global economic landscape.

The head of the International Monetary Fund, Christine Lagarde, said that she does not think there will be a return to the low inflation rates of years past and that Russia’s invasion of Ukraine has changed the economic landscape. This is due to rising food and fuel prices; these higher prices have made it difficult for central banks to maintain price stability and maximum employment. All three central bankers are battling surging inflation in their economies. The Fed embarked on a course earlier this year to hike interest rates and combat the worst US inflation since the 1980s. Earlier this month, Fed officials voted to implement an interest rate hike of three-quarters of a point, the first time since 1994 that it has approved an increase of that size.

Analysts and economists are worried that such moves might plunge the economy into a recession within the next 12 months, but Powell expressed confidence that architecture is stable enough to weather a slowdown in growth, since companies and households are solidly settled financially.

However, the Fed Chair warned that a persistently high inflation rate would be worse than an economic downturn. “Is there a risk that we would go too far [with rate hikes]? Certainly there’s a risk,” Powell said. “But I wouldn’t agree that that is the biggest risk to the economy. The bigger mistake to make would be to fail to restore price stability.”

- Advertisement -spot_img

More articles


Please enter your comment!
Please enter your name here

Latest article