U.S. Fed Chair Jerome Powell has made his stance clear on the importance of the independence of central banks while they work on keeping inflation in check. Restricting inflation can necessitate actions that may not be widely applauded but are necessary.
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While speaking in Stockholm, Sweden, Powell noted the benefits of keeping decisions over monetary policy and political objectives (which could be short-sighted) separate from each other.
While Powell did not mention the policy outlook today, he added that returning prices to stable levels can mean increased interest rates, even if that measure is not always popular during periods of high inflation.
The U.S. Federal Reserve is expected to meet next at the end of January, and its policy announcement on February 1 could very well set the tone for markets for the rest of 2023.
The central bank has maintained that reigning in stubborn inflation will require keeping interest rates higher for longer. The market is widely expecting a 0.25% rate hike next but also expects inflation print to cool down later this week.
Interestingly, Powell also noted that the central bank should stick to its mandate and not try to include social issues under its umbrella.
Major indices remained mixed at the time of writing.
