ADVERTISEMENT

'Strong' case for further rate hikes - Fed's Powell

The Fed this month adopted its seventh rate hike since 2015 and forecast an accelerated pace of increases in its benchmark lending rates, predicting a total of four hikes for the year due to robust hiring and economic activity amid rising prices.

Given current conditions, and with "the risks to the outlook roughly balanced, the case for continued gradual increases in the federal funds rate is strong," Powell said in an address to a European Central Bank forum in Portugal.

The Fed was befuddled last year by the extended weakness in inflation even though unemployment has steadily trended downwards.

But measures of price pressures now show inflation is moving towards the Fed's two percent target. Still, the central bank has signaled it will not overreact, allowing inflation to run a little hot to offset the years when it ran cold.

ADVERTISEMENT

Nevertheless, analysts say 2018 could be the year when a set of circumstances -- higher oil prices, a weakening dollar and simultaneous global growth not to mention a brewing global trade war -- at last combine with scarce labor and rising employment to drive up prices.

Powell also noted, however, that the Fed faced heightened uncertainty when determining the so-called natural rate of unemployment -- the level at which labor markets are balanced -- making it harder to tell when the central bank should take action.

"Natural rate estimates have always been uncertain and may be even more so now as inflation has become less responsive to the unemployment rate," he said, according to the text of his prepared remarks.

A less direct relationship between the unemployment rate and price pressures "makes it harder to assess whether movements in inflation reflect the cyclical position of the economy or other influences," said Powell.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

Lagos postpones eagerly anticipated Easter boat regatta indefinitely

Lagos postpones eagerly anticipated Easter boat regatta indefinitely

Third Mainland Bridge reopens in 1 week, formal ceremony later - Minister

Third Mainland Bridge reopens in 1 week, formal ceremony later - Minister

Sanwo-Olu opens 'Sunday market' on Good Friday for Easter shopping

Sanwo-Olu opens 'Sunday market' on Good Friday for Easter shopping

Wike thanks Tinubu for the opportunity to serve

Wike thanks Tinubu for the opportunity to serve

Barrister Bida pens special birthday prayer for President Tinubu, Nigerians

Barrister Bida pens special birthday prayer for President Tinubu, Nigerians

Tinubu’s aide distributes food items to 1,750 persons in FCT, Kwara

Tinubu’s aide distributes food items to 1,750 persons in FCT, Kwara

Court grants senator accused of forging NYSC certificate ₦50m bail

Court grants senator accused of forging NYSC certificate ₦50m bail

BREAKING: Delta monarch declared wanted by military surrenders to police

BREAKING: Delta monarch declared wanted by military surrenders to police

Renowned Canada-based Nigerian playwright, Oguntokun is dead

Renowned Canada-based Nigerian playwright, Oguntokun is dead

Pulse Sports

Nigeria vs Mali: Has Finidi George done enough to land Super Eagles job permanently?

Nigeria vs Mali: Has Finidi George done enough to land Super Eagles job permanently?

I want to emulate Keshi and win the AFCON - Finidi George shares ambitious Super Eagles dream

I want to emulate Keshi and win the AFCON - Finidi George shares ambitious Super Eagles dream

Michelle Alozie: I had to do it because of African referees

Michelle Alozie: I had to do it because of African referees

AC Milan star reveals he was named after Super Eagles legend Tijani Babangida

AC Milan star reveals he was named after Super Eagles legend Tijani Babangida

Give him the job! Super Eagles fans beg NFF to make Finidi George permanent coach after Nigeria's win over Ghana

Give him the job! Super Eagles fans beg NFF to make Finidi George permanent coach after Nigeria's win over Ghana

Super Eagles 2-1 Black Stars: Nigerians praise Iwobi, Lookman, Finidi George after friendly victory against Ghana

Super Eagles 2-1 Black Stars: Nigerians praise Iwobi, Lookman, Finidi George after friendly victory against Ghana

ADVERTISEMENT
ADVERTISEMENT