US Federal Reserve is expected to continue to keep its monetary policy restrictive for some time in order to ensure that high inflation numbers move back to target over time, according to the central bank's Vice Chair Lael Brainard.
According to Brainard it will take time for the cumulative effect of tighter policy to work through the economy broadly and to tame the price rise.
Brainard made the remarks at the 64th National Association for Business Economics Annual Meeting, in Chicago, Illinois.
"In light of elevated global economic and financial uncertainty, moving forward deliberately and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to cumulative tightening in order to inform our assessments of the path of the policy rate," said Brainard in her address.
In the recently held monetary policy review meeting, the US Federal Reserve raised key interest rates in its fight against red-hot inflation. The key policy rate was increased by 75 basis points to 3.0-3.25 per cent -- which was the third consecutive hike of the same magnitude. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
"In order to bring inflation down and to keep inflation expectations solidly anchored at 2 per cent, the Federal Reserve has increased the federal funds rate target range by 300 basis points in the past seven months, and both market and policymaker surveys indicate additional increases through the end of this year and into next year," Brainard said.
The US central bank seeks to achieve maximum employment and inflation at the rate of 2 per cent over the long run and it anticipates that the ongoing hikes in the target range would be appropriate.
Consumer inflation in the US though declined marginally in August to 8.3 per cent from 8.5 per cent in July but was way above the 2 per cent goal. Inflation data for September is due later this week.
After the latest post-monetary policy held in the third week of September, US Fed Chair Jerome Powell too said restoring price stability will likely require maintaining a "restrictive" policy stance for some time and a historical record cautions strongly against prematurely loosening policy.
( With inputs from ANI )
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