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More rate increases are needed to guarantee “timely” control of inflation

More rate increases are needed to guarantee “timely” control of inflation

The Federal Reserve “You must raise interest rates further to control inflation.”in a timely manner“said the governor of the entity, Michelle Bowman, on Friday in statements in which she outlined a hard-line argument based on a possible increase in energy prices and the possibility that the battle against inflation will take years to resolve. be completed.

Inflation remains too high and I hope it is appropriate for the (Federal Open Market) Committee to raise rates further and keep them at a restrictive level for some time to return inflation to our 2% target in a timely manner.” Bowman said in prepared remarks for an Independent Community Bankers of Colorado event.

Progress on inflation is likely to be slow given the current level of monetary policy tightening“He said, noting that in the authorities’ projections issued by the Fed this week, inflation remains above the 2% target.”at least until the end of 2025″.

Bowman was in favor of the decision taken this week by the Fed to maintain its overnight reference rate in the range of 5.25%-5.5% for now, due to “mixed data” which, together with the signs of economic growth “solid” and continued, they also include some slowdown in inflation and evidence of slowing employment growth.

However, the outlook is unclear, he said, with a particular risk that “Energy prices could rise further and reverse some of the progress we have seen”.

New projections released at the end of a two-day policy meeting on Wednesday showed that the median Fed official expects a further rate hike this year. Neither expects rates to rise further in 2023.

One Fed official expects rates to continue rising to above 6% in 2024, while at least 13 of 19 officials foresee rate cuts.

Source: Gestion

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