If Inflation Does Not Slow, Fed Considers Rate Increase

If inflation does not slow down in the coming period, the U.S. Federal Reserve may raise interest rates. This was stated by Susan Collins, president of the Federal Reserve Bank of Boston.

According to Collins, the current interest rate is helping to reduce inflation, but the pace of price increases remains high. If the situation does not improve, in her assessment, the Fed will need to tighten monetary policy soon.

According to economists' forecasts, the core PCE index in July, which does not account for food and energy prices, increased 3.3% year-over-year. The same indicator was recorded in June. The Fed's inflation target is 2%.

Core inflation in the U.S. has been gradually rising since last year. The Fed links this to several factors, including increased tariffs on imports, rising oil prices due to the war in Iran, and major investments in artificial intelligence.

The Fed's base interest rate is currently in the range of 3.5%-3.75%. The central bank has not changed the rate since December and will make further decisions based on inflation indicators.

Source: Investing.com