A string of strong economic data and signs that inflation is stubbornly high could prompt the Federal Reserve to raise interest rates higher than previously forecast in the coming months, several Fed officials say
From
CHRISTOPHER RUGABER ` Business writer
Mar 2, 2023 4:29pm ET
2 minutes read
WASHINGTON — A string of strong economic data and signs that inflation is stubbornly high could prompt the Federal Reserve to hike interest rates higher than previously forecast in the coming months, several Fed officials say.
On Thursday, Christopher Waller, a member of the Fed’s influential Board of Governors, said the central bank must raise interest rates above 5.4% if the economy continues to show strength and inflation stays high. That would be higher than Fed officials signaled in December when they forecast it would peak at about 5.1% this year.
“Recent data suggests that consumer spending isn’t slowing as much, the job market continues to be unsustainably hot, and inflation isn’t falling as fast as I thought it would,” Waller said in prepared remarks for a business conference in Los Angeles.
His proposal contrasted with a speech he gave in January entitled “A Plea for Cautious Optimism,” which captured a prevailing sentiment at the time when inflation was peaking and steadily declining.
On Wednesday, Minneapolis Federal Reserve Chairman Neel Kashkari said, “I tend to keep raising,” responding to government reports that consumer spending and hiring were strong in January and that inflation has worsened over the past month.
“These are worrying data points that suggest we are not making progress as quickly as we would like,” Kashkari said.
Last Friday, Cleveland Fed President Loretta Mester told Bloomberg News that the Fed “needs to do a little more” to raise rates and keep them high for a longer period of time.
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