Financial Associated Press, October 15 (Editor Zhao Hao) Several Federal Reserve officials said that in order to defeat persistently high inflation, they are ready to raise interest rates to higher levels than previously planned.
On Friday (October 14) local time, Kansas Fed President George said in an online speech that officials should raise central bank interest rates to a restrictive level, and the peak should be higher, “You may You’re going to see a higher end point for the federal funds rate and have to stay there longer.”
George added that she is perhaps the most cautious at the Fed, suggesting other officials may be more aggressive than her. She also said that while the end point of rate hikes may be higher, the pace should not pick up because hasty action could disrupt financial markets and the economy.
Officials at the time expected the median federal funds rate to hit 4.4% by the end of this year and peak at 4.6% by the middle of next year, according to information shown in the “dot plot” in the Fed’s September resolution. Following yesterday’s disappointing inflation report, market analysts see these figures to be higher in December forecasts.
San Francisco Fed President Daly also said on the day that the Fed has raised interest rates by 300 basis points this year. Although there are signs of economic cooling, she is not satisfied with the status quo. Daly was “very supportive” of raising rates to restrictive levels, with between 4.5% and 5% “the most likely outcome”.
The U.S. CPI announced yesterday rose 8.2% year-on-year, and the core CPI hit a 40-year high, pushing up market expectations for the peak of the federal interest rate. In addition to the above two local Fed officials, Fed Governor Cook also said in the day that reaching the 2% inflation target is the top priority.
As of press time, CME Group’s “Fed Watch Tool” shows that there is a two-thirds chance that interest rates will rise to the range of 4.5%-4.75% by the end of this year.
Steven Blitz, chief U.S. economist at TS Lombard, commented, “They have to go higher, I think 5.5% to tame prices.”