Geopolitical tensions risk for world economy, US inflation 'too high'
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The Federal Reserve Chair Jerome Powell pointed out that compared to a year ago, inflation had drastically decreased.
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Federal Reserve Chairman Jerome Powell speaks during a meeting at the Federal Reserve Board Building, Thursday, Sept. 28, 2023, in Washington (AP)
The Federal Reserve Chair Jerome Powell stated on Thursday that geopolitical tensions are a risk to the world economy and that their effects are still "highly uncertain."
"Speaking for myself, I found the attack on Israel horrifying, as is the prospect for more loss of innocent lives," he said during a conference in New York.
Powell implied that a fresh increase in interest rates was possible since US inflation is "still too high" despite a recent decrease.
He went on to say that more proof of "persistently above-trend growth" or new labor market tightness "could warrant further tightening of monetary policy."
US inflation hikes in July for first time in 13 months
The US experienced a rise in inflation in July for the first time in over a year, even as the Federal Reserve continued its gradual move toward the highest interest rates seen in decades. Nevertheless, some economists are highlighting more positive indicators within the latest economic report.
The Consumer Price Index (CPI) released by the US Bureau of Labor Statistics (BLS) on Thursday revealed a 3.2% increase in the overall cost of consumer goods in July 2023 compared to July 2022. This marked the first instance of inflation increasing in 13 months, following a 3% increase in June.
In the previous month's meeting, the US central bank, the Federal Reserve, raised interest rates by a moderate degree, bringing them to their highest level in 22 years. Given the Federal Reserve's aim to keep US inflation under 2%, the logical expectation might be for more interest rate hikes to counter rising inflation. However, some financial experts are suggesting a more intricate scenario.
Laura Rosner-Warburton, a senior economist at the research firm MacroPolicy Perspectives, remarked, "This report contains indications that disinflation may continue. It implies that we may be at or very close to the peak in interest rates."
Other economists interviewed by US media are focusing on the "core" inflation index, a component of the BLS report that excludes food and fuel prices due to their volatile nature. The core inflation rate for July came in at 4.7%, slightly lower than June's 4.8%.
