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Federal Reserve Official: US Inflation Data Disappoints High Interest Rates Will Last Longer

Haiwainet, May 22 (AFP) reported on the 20th that a senior official of the Federal Reserve said the same day that due to the disappointing recent inflation data, the Federal Reserve should maintain the current high interest rate longer than previously expected.

Michael Barr, the vice chairman of the Federal Reserve in charge of supervision, said in a speech at a meeting held in Florida that the recent inflation data was "disappointing", and the Federal Reserve's policy has not yet fully reached the target of annual inflation rate of 2%. Barr said that these results did not give him more confidence to lower the federal funds rate, "which means that we need to allow more time for restrictive policies to continue to work.".

Barr's remarks echoed those of Federal Reserve Chairman Powell. Powell said earlier in May that his confidence in inflation control had been hit, and the Federal Reserve must remain patient "to let restrictive policies work". Philip Jefferson, Vice Chairman of the Federal Reserve, also said in his speech on the 20th that "inflation is falling far less quickly than expected", and whether and when to cut interest rates still needs to be evaluated.

The report released by the US Department of Labor on May 14 showed that wholesale prices in April rose 0.5% month on month, 2.2% year on year, the largest increase since April 2023. At the same time, the US consumer price index has been stuck at around 3% this year, and the personal consumption expenditure price index has also exceeded the annual target of 2% set by the Federal Reserve. Since January 2021, food prices in the United States have risen by more than 21%, and gasoline prices have risen by 50.42%.

In order to fight against inflation, the Federal Reserve has aggressively raised interest rates 11 times in recent years, raising them to a 23 year high. High interest rates have led to an increase in the interest rate of American consumer and commercial loans. The average interest rate of 30-year mortgages in the United States has exceeded 8% for the first time in decades. Various borrowing costs, such as home equity credit lines, auto loans and credit cards, also rose sharply. (Hou Xingchuan, Overseas Network)