Federal Reserve Manager Lorie Logan Weighs In on Potential Rate Hike in June Meeting

By Le Figaro with AFP

Posted on 05/18/2023 at 19:11

A manager of the american central bank ruled Thursday, May 18, like other leaders of the institution, that an additional hike in the key rate could be necessary at the next meeting, the hypothesis of a pause in the increases seeming to move away . A lot of economic data will be released between now and the next Fed meeting on June 13-14, and “could still show that it is appropriate“to take a break, “but to date, we are not there yet“, underlined the president of the Dallas Fed, Lorie Logan, who this year has the right to vote rotating within the decision-making body of the Fed.

The Federal Reserve has, since March 2022, raised its rates 10 times, at each meetingwhich allowedsome progresson the inflation front, she however welcomed. The Fed’s rates thus went from a range of 0-0.25% to 5.00-5.25%. This leads the banks to raise the cost of the loans they offer to households and businesses, in order to ease the pressure on prices.

Slight decline in inflation

Inflation thus slowed slightly in April, to 4.9% over one year against 5.0% in March, according to the CPI index, but rebounded over one month. However, the Fed favors another measure of inflation, the PCE index, whose data for April will be published on May 26. Only a third of market participants expect the Fed to raise rates in June, according to CME Group’s assessment.

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Philip Jefferson, a governor of the Fed, whom Joe Biden has chosen to be vice-president of the institution and whom the Senate will have to confirm to this function, was more cautious on Thursday. “On the one hand, inflation is too high and we have not yet made enough progress to bring it down. On the other hand, GDP has slowed considerably this year, and although the effect on the labor market has been limited so far, demand has clearly started to feel the effects.of these rate hikes, he pointed out.

The job market rebounded unexpectedly in April. However, the labor shortage in the country has contributed to fueling inflation, as wages have risen sharply. Philip Jefferson believes, however, that the economic slowdown should begin “soon to reduce job growth“, and “the unemployment rate could gradually increase to levels still compatible with a growing economy».