US stock indices continue to grow despite the fact that inflation in the US continues to remain at a high level. Yesterday, it became known that in annual terms, the consumer price index increased by 5.4% in July. However, the markets still got a little optimism when they learned that in monthly terms, inflation accelerated by 0.5%, and not by 0.9%, as it was a month earlier. However, this consolation is weak and, for example, the US dollar fell yesterday against its main competitors. It can be recalled that the Fed and even Joe Biden personally have recently made many attempts to calm the markets regarding rising inflation. However, Jerome Powell's rhetoric has worsened on this issue in the last few months. Earlier, Powell said that inflation will begin to slow down "in the coming months", as its growth is caused by "temporary factors, as well as rising energy prices." However, during the last meeting of the Fed, Powell said that inflation may remain at high values for several more months before it begins to slow down. The topic of price growth was also touched upon by members of the Fed Monetary Committee Eric Rosengren and Raphael Bostic, who noted that inflation in the medium term has already reached the target value, so the regulator needs to start discussing the curtailment of the quantitative stimulus program in the near future. It should also be noted here that the Fed itself looks more at core inflation, that is, without considering changes in food and energy prices. This type of inflation slowed down in July, amounting to 4.3% YoY, although the value of 4.5% YoY was recorded a month earlier. On a monthly basis, core inflation was 0.3%, although it increased by 0.9% a month earlier. Thus, the inflation that the Fed is interested in has just begun to slow down. And since inflation has started to slow down, the Fed can continue to more calmly stimulate the recovery of the economy and the labor market, which are priority goals for the US regulator.
US President Joe Biden also tried to calm the markets. He said at a speech at the White House yesterday that inflation will slow down as the country's economy recovers from the crisis caused by the pandemic. "Right now, our experts believe that - the major independent forecasters agree as well - that these bottlenecks and price spikes will reduce as our economy continues to heal... Jobs are up, and monthly price increases have come down. Economic growth is up to the fastest in 40 years, and unemployment is coming down," the President of the United States said.