The U.S. and E.U. highly likely to
increase interest rates next month…
A series of supporting comments follow
U.S. and E.U. highly likely to increase interest rates next month…
series of supporting comments follow
“Inflation is still high...Economy has strength to
“There is still a little way
to go in the fight with inflation,”
says ECB president
In both the U.S. and E.U.,
there are stronger voices being raised that inflation is still too high.
As a result, the Federal
Reserve Board (FRB) and European Central Bank (ECB) are highly likely to raise
interest rates next month.
l “The economy still has strength
to be sustained.”
Loretta J. Mester, President
of the Federal Reserve Board of Cleveland, and John Williams, President of the
Federal Reserve Board of New York, have both expressed their view that base
rates should be raised.
the problem of credit instability in the financial sector has come to the
forefront, but even if interest rates are raised, the economy still has
strength left to be sustained, which is why more effort should be placed on
pushing down prices.
According to Bloomberg News,
on April 20 (local time) at an interview with Yahoo Finance, President Mester
reaffirmed her previous position that for inflation to reach the 2% target, the
FRB would have to raise base rates at least 5%.
“The economy still has
resilience towards interest rate hikes,” she said, and emphasized that her
focus is on the drop in inflation.
However, she displayed
prudence by saying that she doesn’t want any decisions to be made before the
May Federal Open Market Committee (FOMC).
John Williams, President of
the Federal Reserve Bank of New York, holds the position that additional
measures with the FRB are necessary to take control of inflation.
According to the Wall Street
Journal, on April 19, at an event that was held after markets closed, President
Williams revealed that “Inflation is still high…In order to recover price
stability, we will use our monetary policy tools.”
Lorie K. Logan, President of
the Federal Reserve Bank of Dallas, also said that inflation is too high, while
Governor of the Federal Reserve System Michelle Bowman revealed that the FRB is
focusing on lowering inflation.
Although not mentioned
specifically, this seems to be an indication that additional interest rate
hikes are necessary.
According to CME Group, a
futures trading company, investors see the likelihood of at least 80% that the
Federal Reserve System will raise 0.25%p in interest rates at the meeting on
the 2nd -3rd of next month.
This year, the Federal Reserve
System raised interest rates 0.25%p each at the two meetings.
l “Inflation, too strong
compared to our target,” says Christine Lagarde.
The President of the European
Central Bank also sees it necessary to make additional interest rate hikes in
order to control prices.
President Christine Largarde
of the ECB, who is at the centre in terms of political values, remarked at an
event held in Paris on April 20 that “Inflation is far stronger than our target…There
is still a little way left in the fight against inflation.”
Europe’s inflation exceeds
three times that of the ECB target of 2%.
At the ECB monetary policy
meeting on May 4, it is projected that interest rates will be raised 0.25%p or 0.5%p.
In regard to whether they will
reconsider the inflation target of 2%, President Lagarde said that there is no
possibility of that in the near future.
“First we much reach our
target, then confirm whether the attainment was sustainable, and investigate
all types of questions,” she said.
The hawkish Klaas Knot, President
of the Netherland Central Bank, argued that interest rates should continue to
be raised, not only next month, but until July.
(Provided by Yonhap News)