According to the International Monetary Fund (IMF), inflation in the United States will continue for at least another year. Gita Gopinath, IMF First Deputy Manager, cautioned that she would not look at just one data point for the U.S.
Gita Gopinath (first deputy managing director) of the International Monetary Fund, discussed global inflation in an interview in Jackson Hole, Wyoming with Bloomberg.
She responded to a question regarding whether global inflation had reached its peak. We have inflation almost everywhere. While there are some exceptions like Japan and China, we have very high inflation everywhere else,” the IMF executive said.
While there are many global factors, such as food and energy prices, that drive inflation, there are also some more volatile components that can cause it to rise.
Federal Reserve Chairman Jerome Powell stated Friday in his annual Jackson Hole speech, that the central bank would use its tools “forcefully” against inflation, which is at its highest point in over 40 years. He anticipates that the Fed will continue to raise interest rates in a manner that will cause some economic pain for the U.S.
Gopinath commented on Powell’s speech and said: “What was amazing was that he came across as being firm about bringing inflation down, making sure that inflation expectations don’t get de-anchored. That, I believe, is exactly the thing you need to ensure that the economy of the world remains in a healthy place over the medium and long term.”
Friday’s U.S. personal consumption expenses (PCE) inflation data were published. The PCE price index revealed an increase of 6.3% year-over-year in July, compared to 6.8% in June. The Federal Reserve’s preferred measure for inflation is the PCE.
Gopinath stated, “Now, I would be cautious about looking at one point for the U.S.”
“I believe that last year, around the same period, there was an excellent inflation reading. Everyone thought we were on track to see inflation fall. Then, October saw an increase in inflation. “So I believe one should be very cautious about one inflation rating,” the IMF’s first deputy managingdirector pointed out, expounding:
Inflation is expected to remain high for some time, at least for the next year.