The US government reported Thursday that Producer prices rose 8.6% in the 12 months to September , the largest year-over-year increase in nearly 11 years . Data from Wednesday showed that consumer prices in the United States rose 5.4% over the same period.
S 'addressing a virtual Euro50 group meeting on Thursday, the St. Louis Fed President James Bullard called the trend "concerning.
"While I think there is some likelihood that this will naturally wear off over the next six months, I will sayisn't that it's such a strong argument that we can count on what's going on, ”Bullard said, adding that he gives him about a 50% chance.
Bullard pushed for the Fed to start cutting its $ 120 billion in monthly treasury bill and mortgage-backed securities purchases next month, and the minutes of the political meeting of the American central bank of the 21 and September 22 show that policymakers are generally in favor of doing so, with plans to conclude the process by the middle of 2022. learn more
Bullard, however, wants to end bond purchases by the first quarter of 2022 to allow the Fed to raise itsinterest rates starting in the spring if inflation remains uncomfortably high.
The Fed has promised to keep its benchmark above rates overnight lending rate at the current near zero level until the economy reaches full employment, and inflation has not only hit its 2% target, but is on track to stay slightly above of this level for a while.
The central bank set these parameters when inflation was below 2% for years, and the challenge was to increase it rather than slow it down.
But now the opposite problem may arise, as pent-up consumer demand is fueling spending in a economy reopening and businesses, hampered by bottlenecks, are struggling to keep up.
In a speech Wednesday evening at the University State ofSouth Dakota, Fed Governor Michelle Bowman has sounded the alarm bells over inflation and her concerns that accommodative monetary policy is best fueling high prices. asset bubbles. Bowman also called for a start to the bond buying taper next month. learn more
But others have a different view of the situation.
The president of San Francisco Fed's Mary Daly, one of the bank's most accommodating policymakers, told CNN International on Thursday that inflation is not tied to monetary policy at this point and that 'tightening policy shouldn't do much to bring it down.
Daly said the price hike "will last this longmps that COVID will be with us "because it is due to supply chain bottlenecks caused by pandemic-related disruptions, and inflation would subside once the pandemic l ' 'did.
"It is premature to start talking about rate hikes ", Daly said, noting, however, that the point had was reached where "we believe we can reduce the level of support we add to the economy. Reporting by Ann Saphir Editing by Paul Sim ao
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