Despite the developments in Ukraine, “I don’t think you’re going to see much change in the underlying logic. But this is uncharted territory, so we’ll have to see where the world goes.”
In January, inflation stood at 7.5% in the United States, its highest level since February 1982, exceeding analysts’ expectations (7.3%).
The chairman of the Sat Fed. Louis, James Bullard, spoke out on February 14 for a faster pace in raising the benchmark interest rate, noting that during the months of October last year and January 2022, “any idea that this inflation was going to moderate naturally in a reasonable period without the Fed taking action”, he pointed out.
Ukraine Factor
Russian military action in Ukraine is not good news for prices of products and services .
Taking into account that oil prices are at eight-year highs and more disruptions to global supply chains in the wake of the Russian invasion, it is not ruled out that prices will continue to rise.
Loretta Mester, president of the Cleveland Fed, commented that what happened in Ukraine could have an effect on the US economy in the medium term and should be taken into account when defining interest rates.
These geopolitical events can worsen inflation and be detrimental to economic growth in the short term, added Mester, who this year has a vote on monetary policy decisions at the Fed.
“The implications of the unfolding situation in Ukraine for the medium-term economic outlook in the United States will also be a consideration in determining the appropriate pace to remove stimulus,” Mester said at a virtual event hosted by Lyons Companies and the University of Delaware.
With information from Reuters
