The cold statement of the FED on inflation. Rates will stay high.

Jerome Powell is the president of the Fed, the American Central Bank, the most important in the free world!

Yesterday he was giving a press conference, and if there’s one sentence you need to remember, it’s probably this one.

The FED must remain independent and rates high!

“Price stability is the foundation of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high may require measures that are not popular in the short term, as we raise interest rates to slow the economy.”

“The lack of direct political control over our decisions allows us to take these necessary steps without considering short-term political factors”

Jerome Powell therefore did not tackle the subject of monetary policy directly during this speech and “focused on the importance of the role of his institution. He also stressed the importance of staying away from political trends and debates”.

What has he just said to the markets which still do not seem to want to hear him?

That inflation poses a real problem and that central bank doctrine has not changed.

The Fed prefers recession to inflation.

The FED prefers unpopular measures to inflation.

The Fed prefers unemployment to inflation.

And the FED prefers lower stock prices than inflation.

Result ?

Central banks, led by the Fed, will continue to fight the Inflation Hydra, and it may take longer than many realize.

Charles SANNAT

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