Rising Crude Prices Weigh Complicates US Policy Path, Impact On Asia Severe
US Federal Reserve Chair Jerome Powell stated that surging oil prices driven by the Middle East conflict are complicating the central bank's policy path and feeding into inflation. The US economy remains resilient, but the global impact of the oil shock is uneven, with Asia being severely affected.
The US Federal Reserve left its benchmark interest rate unchanged at 3.5 to 3.75 per cent, citing caution due to uncertainty over the Middle East conflict's duration and economic fallout. Fed Chair Jerome Powell said higher energy costs are already contributing to inflation, warning that it will push up overall inflation in the near term. Total Personal Consumption Expenditures prices rose 3.5 per cent in the 12 months ending March, driven by the rise in global oil prices. The US labor market remains stable, with unemployment at 4.3 per cent, and consumer spending continues to hold up despite rising fuel costs. Powell cautioned that sustained increases in gasoline prices could weigh on household spending. The global impact of the oil shock is uneven, with Western Europe and Asia being more severely affected than the US.
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