Federal Reserve Chairman Jerome Powell recently reiterated the central bank's commitment to lower inflation as it is a key factor for the global financial system.
Powell said in a conference introductory speech on the global role of the U.S. currency, “The Fed’s strong determination to mandate price stability is an important factor contributing to widespread confidence in the dollar as a store of value. Therefore, my colleagues and I are focused on returning inflation to the 2 percent objective set ”.
The statement was made two days after the FOMC voted to raise the benchmark interest rate by three-quarters from a percentage point to a target range of 1.5%-1.75%. Banks use those rates to set the cost of short -term loans they provide to each other, while at the same time channeling them to various consumer products such as credit cards, home equity loans and vehicle financing.
Inflation has increased over the past year, with the consumer price index in May registering an increase of 8.6% over the past year.
Fed officials targeted a 2% inflation reading as a healthy one for a growing economy and said they would continue to raise rates until prices return to that range.
Although inflation is detrimental to consumers due to high prices had to be borne by consumers in spending but the matter is not the main focus but the main focus is on the importance of global finance.
Said Powell. "The Fed's commitment to two mandates and our financial stability encourages the international community to hold and use the U.S. dollar."
In addition to price stability, the Fed is responsible for maintaining full employment.
He also noted upcoming changes in the global financial system, including the adoption of digital currencies and payment systems such as FedNow, a service expected to come online in 2023.
