Fed Official Says Additional Rate Hikes May Be Needed to Control Inflation
Federal Reserve Bank of St. Louis President Alberto Musalem stated that more interest rate increases may be necessary to bring inflation down toward the central bank's 2% target, noting persistent demand and supply-side pressures are keeping price risks high. He emphasized that without further policy restraint, it is likely that inflation will remain above target in 18 months. The Fed recently raised rates for the first time in over three years and signaled another hike before year-end to remove economic accommodation. Musalem suggested incremental rate increases would be less disruptive than larger actions later on. He also noted the current benchmark interest rate range of 3.75%–4% is still accommodative, implying it may not yet provide enough restraint to slow inflation effectively.
Topics: Federal Reserve Inflation Monetary Policy Rate Hikes