Poorer Americans are struggling to make ‘ends meet’, top Fed official says

{"text":[[{"start":9.78,"text":"Poorer Americans are struggling to make “ends meet” as the Iran war has worsened cost-of-living strains, according to a top Federal Reserve official who warned the central bank may need to raise rates to cool inflation."}],[{"start":22.84,"text":"Boston Fed president Susan Collins told the FT businesses and households in the US north-east were being squeezed by inflation that has been above the central bank’s 2 per cent goal for more than five years."}],[{"start":34.08,"text":"“I hear [about prices] in every conversation, in some version,” she said in an interview at the Boston Fed’s headquarters, referring to her talks with businesses."}],[{"start":43.16,"text":"Collins added that “among lower- and moderate-income households, I’m increasingly hearing about challenges . . . making ends meet. Energy prices are really challenging and especially in our region.”"}],[{"start":54.32,"text":"New England relies much more heavily on heating oil in the winter than other parts of the country and also uses oil as a backup fuel for electricity generation, leaving it especially exposed to rising crude prices."}],[{"start":66.44,"text":"Collins’s remarks, made on Tuesday, come ahead of a hotly anticipated July inflation report, due later on Wednesday, which will be a determining factor in whether the Fed opts to raise rates when it meets next month."}],[{"start":77.881,"text":"US President Donald Trump’s war against Iran has triggered a surge in inflation this year as oil flows through the Strait of Hormuz have slowed to a trickle, compounding price pressures from tariffs and soaring spending on AI infrastructure."}],[{"start":90.84,"text":"The rate of increase in consumer prices accelerated from 2.4 per cent in February to 4.2 per cent in May, a three-year high. It eased to 3.5 per cent in June as fuel costs receded, but a fresh jump in prices at the pump has made the July figure difficult to predict."}],[{"start":107.64,"text":"Markets have grown concerned that the central bank will struggle to contain the inflationary fallout, causing US borrowing costs to jump last month after it opted not to raise rates. Three policymakers broke with the majority to call for an immediate increase."}],[{"start":120.92,"text":"Collins, who does not currently hold a vote on the Federal Open Market Committee, supported leaving rates unchanged in July, arguing that they were “mildly restrictive” and “would have me expecting disinflation gradually to be sustained”."}],[{"start":134.44,"text":"But she said she would be open to backing an increase as soon as September if the data dictated it. “I do see the possibility that economic conditions in the coming months will require tighter policy, and I would be prepared to raise rates in that context,” she said."}],[{"start":149.92,"text":"Economists polled by Bloomberg expect consumer price inflation to remain elevated in July, even as they predict it will edge slightly lower again to an annual rate of 3.4 per cent. Core inflation, which strips out volatile food and energy prices, is expected to slow from 2.6 to 2.5 per cent."}],[{"start":168.6,"text":"But price growth remains well ahead of the Fed’s 2 per cent target. The personal consumption expenditures inflation measure, its preferred gauge, was 3.7 per cent in June and has been above target since early 2021."}],[{"start":null,"text":"

"}],[{"start":182,"text":"The three rate-setters who called for an interest rate increase last month — Beth Hammack of the Cleveland Fed, Lorie Logan of the Dallas Fed and Neel Kashkari of the Minneapolis Fed — warned that inflation would become harder to tackle the longer it remained elevated."}],[{"start":196.92,"text":"Three Fed governors — Lisa Cook, Philip Jefferson and Christopher Waller — have, as with Collins, indicated they could back a quarter-point rise in September if inflation does not show sufficient signs of cooling off."}],[{"start":209.36,"text":"John Williams, the New York Fed president and FOMC vice-chair, signalled he would also support higher borrowing costs should inflation remain hot. Fed chair Kevin Warsh could also back a rate rise, should markets view data due out in the coming weeks as showing the US economic conditions warrant higher borrowing costs, the FT reported last week."}],[{"start":229.88,"text":"Investors are pricing in a roughly 50 per cent chance borrowing costs will rise by a quarter point at the mid-September vote."}],[{"start":236.48,"text":"The way ahead for policymakers has been complicated by indications that the labour market is losing steam. A surprisingly weak July hiring report last week, which showed 23,000 jobs had been lost, prompted markets to dial back expectations of a near-term rate increase."}],[{"start":253.14,"text":"Over the past three months, the US economy has added a lacklustre 20,000 jobs on average, down sharply from 73,000 in the first quarter of the year, as the labour market remains stuck in a low-hire, low-fire stasis."}],[{"start":268.84,"text":"But Collins cautioned against reading too much into the latest payroll numbers, noting that private-sector hiring remained positive and diffused across sectors, while the unemployment rate was still “relatively stable”."}],[{"start":283.04,"text":"“With very volatile monthly labour job numbers and labour supply that is . . . growing more slowly, I’ve said for some time that we shouldn’t be surprised if there’s some periods where there’s negative job growth and others where it’s surprisingly high.”"}],[{"start":294.82,"text":"But she added that while “overall labour market data are quite mixed” and in an “unusual balance”, the risks to inflation remained greater. “There’s much to watch there, but inflation is too high,” she said."}],[{"start":311.36,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786517950_1096.mp3"}