The US Federal Reserve needs to tighten monetary policy

[WASHINGTON] The pressure on US Federal Reserve chair Kevin Warsh to tighten monetary policy has receded a bit.

The consumer price index report for June was benign. Not only did the overall rate of inflation fall, helped by the sharp drop in petrol prices, but the core measure, which excludes food and energy prices, was also much better behaved.

At the same time, payroll employment growth stalled last month after rising briskly earlier this year, and wage inflation is at a level consistent with 2 per cent price inflation, given the strong underlying trend of productivity growth.