Several U.S. Federal Reserve officials said on Monday that inflation was too high and would take time to calm down. A paper released today suggested that the US policy rate may need to be raised to 6.5% as January’s Personal Consumption Expenditures (PCE) price index posted better-than-expected gains.
“These inflation numbers are still not where we want them to be,” Cleveland Fed President Mester told Bloomberg News in New York.
The PCE Composite Price Index, which the financial authorities focus on as an inflation indicator, rose 5.4% in January compared to the same month last year, far exceeding the authorities’ target of 2%.
Governor Mester
Source: Bloomberg
Mester said the figures “are consistent with the fact that the Fed needs to do a little more on policy rates to keep inflation down.”
Federal Reserve Governor Thomas Jefferson said at a meeting in New York on the same day that “the continued imbalance in labor supply and demand, coupled with the fact that the majority of labor costs are in the services sector, “This suggests that high inflation may only decline at a moderate pace.”
Jefferson and Mester attend the University of Chicago Booth School of Business Monetary Policy Forum.The two were announced by academic and financial economistspaperattended a discussion to discuss
“The ability to bring the economy to a soft landing without triggering a mild recession, and in the process return inflation to its 2% target by the end of 2025, is expected by the Federal Open Market Committee (FOMC).” Our analysis is that it is questionable.”
A 55-page academic study simulates several likely policy-rate scenarios, with computer models suggesting interest rates peak at 5.6%, 6% or 6.5% in the second half of 2023.
Mester declined to comment on whether the latest PCE data would lean towards a 0.5 percentage point rate hike at the next March Fed meeting, but said: What they are trying to do is more important,” he stressed.
Earlier in the day, in an interview with CNBC, he reiterated his support for raising the Fed rate “somewhat” above 5% by the end of the year and staying there for some time thereafter.
Boston Fed President Collins, who attended the afternoon session at the same meeting as Governors Jefferson and Mester, said: I’m assuming,” he said. The president participated in a pre-recorded video.
Also on the same day, St. Louis Fed President James Bullard said, “We must act now to restore confidence.” He spoke at a panel event at Columbia University in New York.
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news-rsf-original-reference paywall">Original title:Fed Officials Flag Risk of Sticky Inflation as PCE Comes in Hot(excerpt)
