Supply chain problems continue: Fed


Minneapolis Fed President Neel Kashkari said supply chain problems that have helped keep U.S. inflation high are not abating as fast as he thought and expressed less confidence about when they will start to unravel. give.

I am confident that we are going to get inflation back down to our 2% target,” Kashkari said in an interview with CNBC. “Pretty much all the news is going in the wrong direction,” she said, citing the war in Ukraine and the Covid-19 lockdowns in China.

Although there are some signs that inflation may have eased, Kashkari added, other indicators point to consumers remaining in sound health.

It is estimated that there is still a savings glut of more than $2 trillion in American balance sheets accumulated during the pandemic.

“By now I would have expected more evidence that these household balance sheets are being spent…there is a possibility that the economy has now been pushed into a more pressured equilibrium than before. And if that is the case, then we will have more work to do to bring inflation back down,” Kashkari said.

For his part, the president of the Atlanta Fed, Raphael Bostic, mentioned that he expects that the central bank will have to make two or three additional increases of half a percentage point in the rate, but said that there are already signs that the pressures of the supply are reaching their peak.

“I would say that a 75 basis point increase is a low probability outcome considering what I expect to happen in the economy over the next three to four months,” he told Reuters in an interview.

Trucking companies are no longer turning away business, as they used to, and bottlenecks are easing, he said, noting that he sees unrealized downside risks to demand, coming from the war and because households react to high inflation with reductions in spending.

“I will remain open to the possibility that those types of adjustments will work in tandem with our monetary policy moves and get us to a place where inflation approaches our target, at a faster pace than perhaps some of my colleagues are projecting. Bostic said. “In which case we won’t have to do as much.”

Risks for the financial system

In a biannual update on financial stability, the Fed said that high inflation, volatility in stock and commodity markets, as well as the war in Ukraine, are the main risks for the US financial system.

Rapidly rising US Treasury yields, war-related problems in oil markets and other factors have already strained parts of the financial system, the report warned, and while the strain has not been as extreme as in previous episodes, the risk of sudden and significant deterioration appears higher than normal.



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