US Federal Reserve Governor Lisa D. Cook has said inflation in the US remains "far too high" despite some encouraging signs lately, and the top central bank official termed it as a concern.
"Inflation remains far too high, despite some encouraging signs lately, and is therefore of great concern. As a Fed policymaker, I am committed to bringing inflation back to our two percent goal," Cook said as she spoke about 'Thoughts on Inflation in a Supply-Constrained Economy'.
Governor Cook made the remarks while speaking at the 2023 Allied Social Science Associations (ASSA) Annual Meeting, New Orleans, Louisiana earlier this week.
Further, in her address, she noted that the high and volatile inflation seen over the past two years appears to reflect rapid shifts in demand, coupled with supply-chain disruptions.
"This has led to sizable demand-supply imbalances across different sectors," Cook said.
To ensure that pandemic-era cost pressures and disruptions do not have lasting effects on inflation, Cook said it is imperative to be vigilant.
"If cost shocks and supply disruptions keep inflation elevated for a long enough period, households' and firms' inflation expectations could move higher--a development that could put additional upward pressure on inflation," Cook said in her address.
Separately, the US central bank officials believe it would not be "appropriate" to begin loosening monetary policy stance in terms of interest rate in 2023, Minutes from the latest policy meeting held on December 13-14 showed.
"No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023," the document showed.
Participating US central bank officials in general observed that a "restrictive policy stance would need to be maintained" until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which the minutes said was likely to take some time.
In November, consumer inflation was at 7.1 per cent.
The US Federal Reserve recently raised interest rates by 50 basis points (bps). The central bank's policy rate is now in a target of 4.25-4.50 per cent, the highest level in 15 years and notably it was near zero in the early part of 2022.
Prior to the recent 50 basis points hike, there has been a fourth consecutive hike of 75 basis points magnitude.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
( With inputs from ANI )
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