Officials mull interest rates after increase in inflation expectation
NEW ORLEANS – Debate over whether U.S. interest rates are high enough deepened among Federal Reserve officials this week, and may be stoked further after a key survey showed a jump in consumers’ inflation expectations.
“There are … important upside risks to inflation that are on my mind, and I think there’s also uncertainties about how restrictive policy is and whether it’s sufficiently restrictive” to return inflation to the U.S. central bank’s 2% target, Dallas Fed President Lorie Logan said at a Louisiana Bankers Association conference in New Orleans.
“I think it’s just too early to think about cutting rates … I think I need to see some of these uncertainties resolved about the path that we’re on, and we need to remain very flexible,” Logan said, though she did not directly address whether she feels the Fed may need to again raise its benchmark policy rate from the 5.25%-5.50% range that has been maintained since July.
Many U.S. central bank officials, including Fed Chair Jerome Powell, have said they still think further rate hikes will prove unnecessary.
In an interview with Reuters, Atlanta Fed President Raphael Bostic said he still thought inflation was likely to slow under the current monetary policy and allow the central bank to begin reducing its policy rate in 2024 – though perhaps by only a quarter of a percentage point and not until the final months of the year.
“I still have that belief,” Bostic said in the interview on Thursday, though “it is going to take some time” to be sure inflation is set to fall.