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Jerome Powell: Inflation ‘Has Increased Notably and Will Likely Remain Elevated’

Jerome Powell

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The Chairman of the Federal Reserve (FED), Jerome Powell, assured today that inflation would remain elevated “in the coming months” in the United States, although he will warn that the economy is “far from” the central bank’s objectives to consider a change in monetary policy.

In a speech to be delivered in a few hours before the House Financial Services Committee, and previewed by the FED, Powell commented on the recent and sustained rise in inflation in the country that has generated concern.

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” the text states.

The inflation rate in the United States stood at 5.4% in June, the highest in 13 years.

Just last month, the FED raised its inflation forecast for the end of 2021 to 3.4%, above its annual target of 2%.

On the other hand, Powell acknowledges the “improvement” in the recovery, especially in the labor market, but insists that the economy is “far from” getting back to normal after the pandemic.

“Employment generation should be strong in the coming months as public health conditions continue to improve and some of the pandemic-related factors that are currently holding back the labor market abate,” he stresses.

In June, the unemployment rate in the world’s leading economy closed at 5.9%, but there are still more than seven million fewer jobs than at the start of 2020 before the arrival of the pandemic.

The FED has maintained interest rates between 0 % and 0.25 % since March last year and a monthly program of massive bond purchases worth 120 billion dollars.

The central bank will hold its next monetary policy meeting on July 27-28.

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