According To An IMF Official Quoted In The Financial Times, US Inflation Has Yet To Turn The Corner

January 5 (Reuters) - Inflation in the United States has not “turned the corner yet,” and the Federal Reserve should not claim triumph in the battle against increasing prices, according to a senior IMF official in an interview with the Financial Times on Thursday.

Gita Gopinath, the Fund's deputy managing director, encouraged the Federal Reserve to continue raising interest rates this year.

She emphasized the need for the Fed “maintain tight monetary policy” until a “very clear, lasting drop in inflation” was shown in wages and sectors other than food and energy.

“If you look at labor market indicators and highly sticky components of inflation like services inflation, I believe it's evident that we haven't turned the corner on inflation,” she told the newspaper.

The remarks come as statistics released on Wednesday showed that job postings in the United States declined only a little in November, a proxy for labor market shortages and pressure on companies to give out higher-than-normal salary hikes.

The minutes of the Fed's policy meeting on December 13-14, released on Wednesday, revealed that policymakers agreed that the central bank must now balance its battle against price pressures with the dangers of slowing the economy too much.

The IMF reduced its forecast for global economic growth in 2023 in October, citing the ongoing drag from the Ukraine conflict, as well as inflationary pressures and high-interest rates manufactured by central banks to control those price pressures.

Gopinath also said in the interview that she expects China's economy will suffer severely in the near future. However, a resurgence is anticipated later this year when Chinese demand rebounds, according to the research.

Stay tuned for more news.

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