Following Powell, the heads of central banks in Europe and other countries “continue to raise interest rates”

U.S. and European central banks emphasize the need to raise interest rates despite concerns over economic slowdown

Japan announces monetary easing policy stating that inflation will slow next year

Following the remarks of US Federal Reserve Chairman Jerome Powell’s ‘maintenance of high interest rates’, high-ranking officials from central banks in Europe and other major countries announced that they would keep interest rates at a high level.

At the annual economic policy symposium held on the 27th (local time) in Jackson Hole, Wyoming, central bank heads from around the world sent out a hawkish message that they would continue to raise interest rates to combat inflation, Bloomberg News reported on the same day. In particular, policy makers in the US and Europe, who are facing inflation for the first time in decades, have refuted some speculation that they will be hesitant to raise interest rates because of concerns regarding a recession.

Federal Reserve Chairman Jerome Powell, Fed Vice Chairman Rael Brainerd, and New York Fed President John Williams (from right) attend a meeting in Jackson Hole, Wyoming, USA on the 26th (local time).

Isabelle Schnabel, European Central Bank (ECB) director, stressed the need for a rate hike on the same day and said, “Even if we enter a recession, we have little option other than to continue on the road to normalization.” In particular, Schnabel said, “Central banks in each country must express a strong commitment to lowering inflation. There is a risk of seeing the For this reason, it is speculated that Europe, which took the ‘big step’ of raising interest rates by 0.5 percentage points at a time last month, may be carrying out a ‘giant step’ of raising interest rates by 0.75 percentage points at the monetary policy meeting in September.

Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Archyde.com during the Jackson Hole meeting that the Fed will raise rates to just over 4% by early next year, with no rate cuts during 2023. predicted.

Earlier, Chairman Powell also said that even if ‘economic pain’ ensues, a high level of interest rate hike is necessary to lower the inflation rate. In his keynote speech the day before, Chairman Powell said, “Once once more, I mentioned that an unusually large rate hike may be appropriate,” adding strength to the observation that the Fed is carrying out its third ‘giant step’ in September. loaded Chairman Powell also said that “one monthly improvement is not enough to convince us that the rate of inflation has come down.” The US consumer price index (CPI) growth rate in July was slower than in the previous month, which directly refuted market expectations that the Fed would lower the rate of interest rate hikes.

On the same day, Joachim Nagel, the governor of the German Central Bank (Bundesbank), said, “Inflation is so high that central banks have to raise interest rates in this situation.” also said

Japan, on the other hand, announced that it would continue easing its currency, contrasting with the US, Europe and South Korea. Bank of Japan Governor Haruhiko Kuroda said, “By the end of this year, inflation is expected to approach 2% or 3% and further down to 1.5% next year. He also said that Japan’s current inflation rate of 2.4% was largely driven by rising international commodity prices.

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