The US central bank intends to raise interest rates to reduce inflation

Washington / agencies : 

The president of the San Francisco Fed, Mary Daly, said that the US central bank will most likely need to continue to increase interest rates and keep them at high levels for a longer period of time in order to reduce inflation.

According to Daly, in a speech on Saturday at Princeton University in New Jersey: "in order to leave this episode of high inflation behind us, it is necessary to have more tightening of monetary policy, maintaining it for a longer period".

Daly said that inflation remains high in the goods, housing and other services sectors, and the incoming data paint an unclear picture of the momentum of falling inflation.

The annual inflation rate in the United States slowed in January to its lowest level in 15 months, to 6.4 percent, compared to 6.5 percent in December, but came above expectations of a decline to 6.2 percent.

Daly said the Fed cannot stop raising interest rates as inflation continues to rise, and she supports raising interest rates to between 5 and 5.5 percent.

With US inflation rates remaining at high levels, market expectations are growing for further monetary tightening during the upcoming meetings of the Federal Reserve.

The US Federal Reserve raised its key interest rates by 25 basis points at the beginning of this month, at its first meeting this year, to reach a range of 4.5 to 4.75 percent, in line with market expectations.

The head of the US Federal Reserve, Jerome Powell, pledged further increases in interest rates over the coming period in order to control inflation and reduce it to the target level of 2 percent.

Powell said that the US Federal Reserve has not yet reached sufficient interest rates to curb inflation, noting that the Federal Reserve is considering two new increases in interest rates in order to maintain a restrictive level of monetary policy that allows curbing inflation.

Economists predict that the Fed may raise the interest rate above the peak of 5.1 percent that it expected in December and hold the rate at this level for some time.