Powell "Inflation May Rise Further Due to Ukraine Impact"... Reaffirms March Rate Hike

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Jerome Powell, Chair of the Federal Reserve (Fed), stated on the 3rd (local time) that inflation in the United States could rise further due to the aftermath of Russia's invasion of Ukraine. He also reaffirmed his plan to raise interest rates at the March Federal Open Market Committee (FOMC) meeting to curb inflation, which is at its highest level in 40 years.

At the Senate Banking Committee hearing that day, Chair Powell said, "The ultimate impact of the war is uncertain," but added, "At least in the short term, inflation could permeate the U.S. economy at a higher level."

He explained, "Risk (investment) sentiment has decreased, leading to a contraction in investment. We have seen people restraining consumption," and added, "It is unclear what impact both demand and supply will have." He also confirmed that the Fed is closely monitoring the situation and has begun simulations on how rising oil prices might affect the economy.

Following a 7.5% surge in the Consumer Price Index (CPI) in January compared to the same month last year, there are expectations that the February CPI, scheduled to be announced next week, could rise further due to the Ukraine crisis.

On the same day, Chair Powell reiterated the plan to raise interest rates in March. He emphasized, "It is appropriate to continue on the path we had in mind before the Ukraine invasion." The March FOMC meeting will be held on the 15th-16th. Furthermore, he stated, "Inflation is high," and added that if inflation remains at a high level, larger rate hikes could be considered in the future.

Chair Powell also mentioned the plan to raise rates this month at the House Financial Services Committee the previous day, specifically supporting a 0.25 percentage point increase.

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