Federal Reserve chairman Jay Powell gave an update on the US economy as the committee announced it would be holding interest rates at 3.5 to 3.75 percent.
Powell expressed concern over the health of the US economy as a result of ‘zero net job creation’ and admitted that inflation is likely to spike as a result of the rise in energy prices caused by the US-Israeli war on Iran.
“The thing that I think a good number of people on the committee are concerned about is just the very, very low level of job creation,” he explained. “You can argue that it’s a consequence of deliberate policy, which is really the changes to immigration.”
“In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy,” he noted, while stressing that the impact of tariffs on inflation has demonstrated ‘slow progress’ but is also expected to be seen.
In terms of the effects on consumer prices, Power was non-committal and brief, even joking that it might be better if they skipped giving the SEP report this time.
“If we were ever going to skip an SEP, this would be a good one because we just don’t know,” he admitted. “We just don’t know how big these effects are going to be.”
“Gas prices are up almost a dollar a gallon. We hope that isn’t for a long period of time,” he continued. “I don’t want to speculate about what that might mean because honestly that would sound like I have some idea of what’s actually going to happen and I don’t think anybody really does. We’re going to see how this works out and I just would leave it at that.”
This comes amid a volatile conflict in the Middle East following joint military operations by the United States and Israel against Iran on February 28.
Tehran has since launched retaliatory strikes targeting Israel and US assets across the region, with the conflict expanding to include Hezbollah in Lebanon, while explosions have been heard in many Gulf States.
During the escalation, Iran’s Supreme Leader Ali Khamenei was killed and later succeeded by his son Mojtaba Khamenei.
The fighting has also disrupted shipping routes, including the Strait of Hormuz, pushing oil prices above $100 per barrel and adding pressure to global markets.
Federal Reserve Board of Governors, via Viory.Video
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