Fed: High inflation remains the “biggest risk” to the economy

The president of the Federal Reserve of Chicago, Austan Goolsbee, said Monday that the risk of the inflation remains above the 2% target is still higher than that of a monetary politics restrictive of central bank slow the economy more than necessary to control the pace of price increases.

“The risk that inflation remains above what we want is the biggest risk,” Goolsbee said in comments to CNBC. “We have to get inflation back to target (…) We should have a 100% commitment.”

Goolsbee said the Fed would have to “play by ear” to see if further interest rate increases are necessary.

However, he also stated that the debate over the current phase of the Fed’s monetary policy “It will stop being how much more (rates) are going to rise and will become how long we need to maintain rates” at the maximum level.

The Fed last week held its benchmark federal funds rate steady in the 5.25% to 5.5% range, and most policymakers anticipated that an additional quarter-point increase would be necessary this year.

Most notably, they halved the pace at which the policy rate is expected to fall next year as inflation slows, with officials projecting just a half-point of cuts in 2024 versus a one-point reduction. full percentage anticipated in June.

Source: Reuters