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WASHINGTON: The Federal Reserve warned on Wednesday that “broad-based” inflationary pressures remained in the United States, a day after comments from Fed Chairman Jerome Powell sent stocks tumbling.
Powell had earlier unnerved markets by warning that the central bank was poised to accelerate the pace of rate hikes and could hike rates higher than expected if necessary.
On Wednesday, the Federal Reserve said in its “Grey Book” survey of the U.S. economy that most districts saw moderate to moderate gains in employment, while labor market conditions remained firm.
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U.S. poised to resume higher rate hikes if strong data continues: Powell
Overall economic activity picked up slightly in the year ended Feb. 27, with six of the Fed’s 12 districts reporting a modest expansion in the pace of activity. The other six regions reported little or no change.
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Several districts reported higher price inflation, with inflationary pressures continuing to rise in the New York Fed district and housing rental costs rising “steadily” in the Kansas City Fed district.
Inflation remains stubbornly above the Fed’s long-run target of 2%, even as aggressive monetary tightening has raised interest rates to the highest level since the global financial crisis.
On Tuesday, Powell told lawmakers at a Senate hearing that the labor market remains “very tight.”
More than half a million new jobs were created in January, pushing the unemployment rate to its lowest level since the 1960s.
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