BUSINESS US Fed expected to stand its ground despite rising inflation

BUSINESS

US Fed expected to stand its ground despite rising inflation

AFP

10:57, June 13, 2021

A Wall St sign hangs at the New York Stock Exchange (NYSE) at Wall Street on March 23, 2021 in New York City. (Photo: AFP)

Even in the face of rising inflation, the lackluster progress on restoring jobs lost during the pandemic means the US Federal Reserve is unlikely to budge on monetary policy when it meets next week.

Central bank chief Jerome Powell has made it clear the Fed will hold the line on its massive bond buying program and rock-bottom lending rates until data reflect lasting improvement in employment across all economic strata.

But the recent surge in inflation in the world's largest economy is ramping up the pressure on policymakers to begin to pull back on stimulus programs.

Hints of whether central bankers will buckle may be seen next week when the Fed's policy-setting Federal Open Markets Committee (FOMC) holds its two-day policy meeting.

"No good deed goes unpunished and that is the case with the rapid reopening of the economy," economist Joel Naroff said in an analysis.

"The upside is that growth is soaring. The downside is that consumer inflation is surging, and labor problems are pressuring businesses."

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