BlockBeats news, April 16, Federal Reserve Governor Moussalem stated on Wednesday that high oil prices could keep the core inflation rate nearly one percentage point above the Fed’s 2% target for the remainder of the year, and the Fed may need to keep interest rates unchanged. Moussalem said: “We are likely to see some pass-through of oil prices to the core inflation rate,” and by the end of this year, the fundamental measure of price increases will be “slightly below 3%, perhaps around 3%,” with risks of further upside.
Moussalem said the Fed is likely to maintain its policy rate in the current range of 3.50%-3.75% for “some time,” while monitoring inflation, employment, and economic data in the coming months, a view shared by many of his colleagues. The impact of last year’s tariff increases may gradually fade this quarter, and housing price inflation is also easing. As oil prices rise, inflation in a range of service sectors remains high, and if inflation begins to climb and risks pulling up inflation expectations, he would be open to raising rates.
Moussalem also noted that the oil market represents “the third negative supply shock in 12 months,” and combined with rising tariff rates and stricter immigration rules, both the inflation outlook and the job market face risks, potentially hitting economic growth. He expects economic growth to slow this year but remain between 1.5% and 2%. (Jin10)
