Some Federal Reserve officials are happy to see inflation falling, but warned that the inflation rate is still too high and is still a long way off the central bank’s target level. It is better to raise interest rates too much than to go too far.
On Thursday (10th) the U.S. Department of Labor announced that the October Consumer Price Index (CPI) rose 0.4% month-on-month and 7.7% year-on-year. Core too. CPI has fallen from its previous value and has been below market expectations Although it was still at a high level, price growth appears to have slowed and is likely to decline further.
Inflation showed signs of cooling, prompting US equities to close more than a thousand points on Thursday.US dollar indexThe 2-year US Treasury yield, which is more sensitive to central bank rates, fell to around 4.3%, a two-week low.
Several Fed officials, including San Francisco Fed Chair Mary Daly, spoke on Thursday. Dai Li said the October CPI report is indeed good news, but the annual inflation rate of 7.7% is still too high and is still a long way off the central bank’s 2% target.
While he believes the time has come to slow the pace of rate hikes, he believes the Fed should not repeat the mistakes of the 1970s, when it stopped tightening policies too soon, causing higher inflation expectations to settle. insinuated into the US economy, and would rather raise the frequencies too much than raise the frequencies. Breath strength is too small.
Daly expects interest rates to remain at high levels for a longer period of time and does not expect rate cuts to start in September next year.
Cleveland Fed Chair Loretta Mester also believes that although the report shows that both main and core inflation have slowed, they are still frighteningly high and more persistent than expected, the biggest at the moment. insufficient.
Kansas Fed Chair Esther George said that even at a low monthly rate, inflation is still unacceptably high. With high inflation likely to persist, monetary policy clearly has more work to do, although she advocates a more cautious approach to avoiding wild swings in financial markets.
Dallas Federal Reserve Bank Chairman Lorie Logan previously said the pace of rate hikes may start to slow down soon, but he also believes the general publicThe slower pace should not be interpreted as a more accommodating policy.
Mester and George are both voting members of the Federal Open Market Committee (FOMC) this year.
The Fed has raised interest rates six times this year, bringing the cumulative rate hike to 3.75 percentage points, including four consecutive 3-yard rate hikes, the most aggressive tightening since 1990, when overnight interest were used as the main policy tool.
Market prices reacted immediately after the unexpectedly attractive CPI data was released, with CME data showing the odds of a 2-yard rate hike in December jumped sharply to 85.4%.
