Federal Reserve officials warn that inflation is currently high and continues to rise, requiring a high level of focus in policy.

Mr. Hammack emphasizes that the neutral policy rate is still far off, there is no need for additional economic stimulus, and forecasts that the labor market will balance even as growth slows.

MAIN CONTENT

  • Inflation is currently too high and trending upward.

  • The neutral policy has not yet been achieved, and there is no need for further economic stimulus.

  • There is no expectation for the Fed to cut interest rates in September, and the unemployment situation is an important indicator.

What is the current level of inflation in the United States and what is the trend?

Mr. Hammack, a Federal Reserve official, believes that inflation is currently too high and is trending upward, requiring strong policy focus. This is the main challenge in conducting current monetary policy.

High inflation puts pressure on prices and consumer income, making it more complex to manage economic growth. Closely monitoring inflation indicators will help assess the necessity of subsequent policy adjustments.

Has the current monetary policy reached a neutral level?

According to Mr. Hammack's view, the neutral policy rate is still far off and has not been established, emphasizing that economic stimulus measures are not necessary at this time.

The neutral policy rate is understood as the interest rate that does not exert pressure to increase or decrease inflation. The fact that the market has not reached this level indicates that the Fed still has time to continue closely controlling policies to stabilize the economy.

How is the labor market situation and its impact on policy?

Mr. Hammack predicts that the labor market will remain balanced even as economic growth shows signs of slowing, with the unemployment rate being seen as a key indicator for evaluation.

A stable labor market supports decision-making regarding monetary policy measures. A low unemployment rate indicates that the economy is still healthy, not placing significant pressure on immediate rate cuts or increases.

"With the current data, I do not expect the Federal Reserve to cut interest rates in September."

Mr. Hammack, Federal Reserve official, August 2024

How is the impact of tariffs on the economy assessed?

Regarding tariffs, Mr. Hammack stated it is unclear whether this is a one-time impact or has a lasting effect, making the prediction of economic impact more difficult.

Tariffs can increase raw material prices, affecting inflation and production costs. However, current economic indicators have not clearly confirmed the durability of this impact, requiring further monitoring in the near future.

Does the Federal Reserve plan to cut interest rates in September?

Based on available data and Mr. Hammack's analysis, the Fed has no plan to cut interest rates in September 2024, maintaining a tightening policy to control inflation.

Keeping interest rates unchanged demonstrates that the Fed prioritizes price stability and avoids the risk of inflation flaring up again, especially when the labor market still shows positive signals and slow recovery.

Frequently Asked Questions

How does high inflation affect consumers?

High inflation increases prices, decreases purchasing power, and negatively affects spending and saving behavior of consumers.

Why is the neutral policy important for the Fed?

The neutral policy rate ensures that interest rates do not imbalance inflation or growth, maintaining economic stability.

What role does a stable labor market play in conducting monetary policy?

A healthy labor market provides the Fed with a basis to maintain or adjust interest rates in line with economic goals.

Why is the Fed not cutting interest rates in September 2024?

Due to high inflation pressure and insufficient economic data to warrant easing, the Fed has kept interest rates unchanged to stabilize the market.

How do tariffs affect inflation?

Tariffs can increase production costs and the prices of goods, contributing to rising inflation, but the extent and duration are unclear.

Source: https://tintucbitcoin.com/fed-giu-lai-suat-lam-phat-lo-ngai/

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