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Powell insists that the Federal Reserve is close to starting to reduce interest rates

Powell insists that the Federal Reserve is close to starting to reduce interest rates

The president of the Federal Reserve, Jerome Powellstated this Thursday that “it won’t be long” for the US central bank to cut rates and assured that the health of the US economy is better than that of any other developed country.

Powell, who appeared before a US Senate committee this Thursday, added that when the Federal Reserve becomes more confident that inflation is approaching the 2%it will be time to “reduce the level of restriction” so that the economy does not go into recession.

The president of the Federal Reserve explained that ““The economy is growing in a healthy, sustainable and solid way,” that the labor market “it is very strong” and that although inflation was very high, “since the beginning of the year it has reduced considerably”.

His statements suggest that the central bank will begin to lower the cost of money this year. Reference interest rates are currently the highest in 23 years, located between 5.25-5.50%.

The Fed raised its benchmark interest rates to contain inflation. High rates make credit more expensive and discourage consumption and investment, thus reducing pressures on prices.

Powell also highlighted that the housing market “He is in a very problematic situation” in the face of a housing shortage that has no quick solution.

According to Powell, the housing shortage is the result of a combination of the restrictions that cities have imposed on building new homes, along with material supply problems caused by the pandemic and high interest rates.

And once the short-term problems are resolved, and ““As interest rates go down, we are going to be back in the same place: that we don’t have enough housing,” Powell added.

With information from EFE and AFP

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Source: Gestion

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