According to the International Monetary Fund, inflation in America will continue for at least one more year. “I would be careful about looking at one data point for the U.S.,” IMF First Deputy Managing Director Gita Gopinath cautioned.
IMF: US Economy and Global Inflation
Gita, the first deputy managing direct of the International Monetary Fund(IMF), spoke out about the U.S. and global inflation in a Bloomberg interview Friday, Jackson Hole.
Responding to a question about whether global inflation has peaked, she said: “I think it’s too early to say. Inflation is almost everywhere. There are important exceptions, like China and Japan, but everywhere else we have high levels of inflation.” The IMF executive added:
Although there are some global drivers like food and energy costs, inflation is driven by a variety of factors. However, high levels of inflation can also be caused by more permanent components.
On Friday, Federal Reserve Chairman Jerome Powell stressed in his annual Jackson Hole speech that the central bank will use its tools “forcefully” to attack inflation, which is still running near its highest level in more than 40 years. The Fed is expected to keep raising interest rates, which will be a pain for the U.S. economic system.
Commenting on Powell’s speech, Gopinath opined: “What was great was that he came out as being firm and resolute about bringing inflation down to target, making sure inflation expectations don’t get de-anchored and that, I think, is exactly what you need to make sure that the economic health of the world is in a good place over the medium to long term.”
Friday saw the publication of U.S. personal consume expenditures (PCE-) inflation data. In July, the PCE price index saw a 6.3% increase year-over-year, compared to 6.8% in June. The PCE is the Federal Reserve’s preferred measure of inflation.
“Now, I would be careful about looking at one data point for the U.S.,” Gopinath stressed.
“I think last year around the same time, there was a good inflation reading and everybody thought we were on track for inflation to come down. But then, inflation rose again in October. So I think one needs to be very wary about one inflation rating,” the IMF’s first deputy managing director pointed out, elaborating:
Inflation is expected to remain high in this period for at least another year.
Do you agree with Gita, IMF’s First Deputy Managing director about U.S. economic inflation? We’d love to hear from you in the comment section.
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