Washington (AFP)

The very sharp rise in prices in the United States is causing a lot of concern, but, for the president of the American Central Bank (Fed), this does not mark the return of the inflationary spiral of the 1970s, and the situation should stabilize several months from now.

Inflation "should remain high in the coming months before slowing down," said Jerome Powell Wednesday afternoon to elected representatives of the House of Representatives, according to his speech published upstream.

Global supply disruptions have led to a sharp rise in the prices of some products and services, but this "should be partially reversed as the effects of bottlenecks dissipate," said Jerome Powell.

As for the comparison effect over one year, with prices which had plunged when the world was confined to spring 2020, it will also decrease, since prices were then slowly raised.

His speech remains the same, despite a rise in prices which recently reached a level not seen since 2008, + 3.9% over one year in May according to the PCE index followed by the Fed, + 5.4% in June according to the CPI index.

In particular, gasoline and used cars are pushing up the numbers.

# photo1

The latest data to date, wholesale prices, which recorded in June their largest increase since the index began to be measured in November 2010. They jumped 7.3% compared to June 2020, according to the PPI index released Wednesday by the Labor Department.

Beyond these figures, concerns relate mainly to the lasting or temporary nature of this inflation.

The president of the Fed, like the economists of the White House and many others, continues to anticipate a stabilization of inflation, in a few months, around 2%, target of the Central Bank.

Some even believe that the one-year peak of inflation has been reached.

- Full recovery -

This price increase may be high, but it will take more for the Fed to tighten its monetary conditions.

The institution assures that it "will continue to provide powerful support to the economy until the recovery is complete", according to Jerome Powell.

To establish its monetary policy, it looks closely at the progress made in two areas: inflation, which must exceed 2% for a while, then slow down and stay around this target in the medium term;

and employment, which must return to a maximum level.

However, "conditions on the labor market have continued to improve, but there is still a long way to go," he warned.

# photo2

"We still think it will be appropriate to keep (the key rates at their current level) until labor market conditions have reached levels" corresponding to full employment, said Jerome Powell.

The Fed had, to support the American economy hit hard by the crisis caused by the Covid-19, lowered its key rates in a range of 0% to 0.25%, and buys each month for 120 billion dollars of treasury bills and mortgage backed securities.

Moreover, "as we have said, we will warn before announcing any decision to change our purchases" of assets, which should be reduced before rates are, in a second step, raised, a t -He underlines.

The chairman of the powerful US Federal Reserve has also once again assured that the institution stands "ready to adjust monetary policy appropriately if we observe any signs that the path of inflation or that the outlook for Longer-term inflation shifted significantly and persistently beyond levels consistent with our objective. "

Jerome Powell's hearing will begin at 4:00 p.m. GMT before the House of Representatives.

He will be questioned again Thursday, by the Senators this time.

© 2021 AFP