This a follow up on yesterday's post "Can individual central banks focusing on matching supply and demand at a national level go too far because other central banks are already weakening global demand?" It had excerpts from a Sept. 26 WSJ article.
Below are excerpts from two related articles, both from yesterday's WSJ.
See Top Fed Official Warns of More Persistent Price Pressures by Nick Timiraos. Excerpts:
New York Fed President John Williams said
"“Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done,”"
He also said
"“The fact is, lower commodity prices and receding supply-chain issues will not be enough by themselves to bring inflation back to our 2% objective.”"
and
"Inflation pressures have become broad based across a wide range of goods and services,” Mr. Williams said. “Demand for labor and services is far outstripping available supply. This is resulting in broad-based inflation, which will take longer to bring down.”"
This seems to indicate that the Fed should keep raising interest rates. But UNCTAD (the United Nations Conference on Trade and Development) says that when one country raises rates, it lower demand in other countries as well (Fed Chair Powell says they take that into account).
See U.N. Calls On Fed, Other Central Banks to Halt Interest-Rate Increases: A U.N. agency warns that further policy tightening risks a global economic downturn by Paul Hannon. Excerpts:
"The Federal Reserve and other central banks risk pushing the global economy into recession followed by prolonged stagnation if they keep raising interest rates, a United Nations agency said Monday."
"the Fed risks causing significant harm to developing countries if it persists with rapid rate rises. The agency estimated that a percentage point rise in the Fed’s key interest rate lowers economic output in other rich countries by 0.5%, and economic output in poor countries by 0.8% over the subsequent three years."
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