The economic growth of the United States is currently in a state of low inflation and Jerome Powell, the chairman of the Federal Reserve, has said that further action is likely needed to bring the rate back down. Powell has been warning of a possible economic slowdown in the U.S. for some time, and recent data showing that inflation is still too high may indicate that he is probably correct.
At a speech given in Washington D.C., Powell said that the current condition of the U.S. economy cannot sustain the 2% inflation rate that the Federal Reserve is aiming for. Powell pointed to the stalemate in U.S. fiscal policy as a contributing factor to the current low inflation rate. He believes that if the government was able to approve a fiscal stimulus package then it could bring the inflation rate back up.
The recent report from the Commerce Department showed that the annualized inflation rate in the United States currently stands at 1.6%. This is lower than the 2% target the Federal Reserve is aiming for and despite Powell’s warnings it does not seem to be changing anytime soon.
So, what can be done to bring the inflation rate back up? Powell believes that the current low economic growth in the U.S. could be a factor contributing to the low inflation rate. To increase the rate, he suggested that further economic stimulus is likely needed. He believes that fiscal policy should focus more on boosting consumer spending to help the economy and reduce the inflation rate.
Powell also recommended an emphasis on “slack in the labor market” noting that wages should continue to rise in order to help keep the rate up. He believes that businesses should be incentivized to hire more staff and that the government should do what it can to incentivize businesses to make investments that can help stimulate the economy.
Overall, while the current inflation rate in the United States is lower than desired, there are options available for the Fed and the government to work together and help make improvements. Ultimately, it’s up to the Federal Reserve and the government to implement the necessary measures to help bring inflation back up, regardless of what policies are desired.
The economic growth of the United States is currently in a state of low inflation and Jerome Powell, the chairman of the Federal Reserve, has said that further action is likely needed to bring the rate back down. Powell has been warning of a possible economic slowdown in the U.S. for some time, and recent data showing that inflation is still too high may indicate that he is probably correct.
At a speech given in Washington D.C., Powell said that the current condition of the U.S. economy cannot sustain the 2% inflation rate that the Federal Reserve is aiming for. Powell pointed to the stalemate in U.S. fiscal policy as a contributing factor to the current low inflation rate. He believes that if the government was able to approve a fiscal stimulus package then it could bring the inflation rate back up.
The recent report from the Commerce Department showed that the annualized inflation rate in the United States currently stands at 1.6%. This is lower than the 2% target the Federal Reserve is aiming for and despite Powell’s warnings it does not seem to be changing anytime soon.
So, what can be done to bring the inflation rate back up? Powell believes that the current low economic growth in the U.S. could be a factor contributing to the low inflation rate. To increase the rate, he suggested that further economic stimulus is likely needed. He believes that fiscal policy should focus more on boosting consumer spending to help the economy and reduce the inflation rate.
Powell also recommended an emphasis on “slack in the labor market” noting that wages should continue to rise in order to help keep the rate up. He believes that businesses should be incentivized to hire more staff and that the government should do what it can to incentivize businesses to make investments that can help stimulate the economy.
Overall, while the current inflation rate in the United States is lower than desired, there are options available for the Fed and the government to work together and help make improvements. Ultimately, it’s up to the Federal Reserve and the government to implement the necessary measures to help bring inflation back up, regardless of what policies are desired.
