Howard Schneider and Lindsay (NYSE: LNN) Dunsmuir
WASHINGTON (Reuters) – Federal Reserve officials ended their Public comments before the Fed’s September – policy meeting During the period, there is a strong call for another sharp interest rate hike to deal with high inflation.
“Based on what I know today, I support a substantial rate hike at the next meeting…to bring the policy rate to a level that clearly limits demand,” Fed Governor Christopher Waller told senior Austrian graduate School.
While he did not explicitly call for another three-quarters rate hike at this month’s meeting, his comments leaned in that direction. Waller noted that he does not believe inflation will fall “significantly and consistently” while recession fears are fading.
As other Fed officials have begun to emphasize, Waller said it was less clear when the cost of services would slow, even with modest commodity prices. Rising rents will also continue to push up inflation, he said.
Fed policymakers will receive the last round of monthly inflation data before their meeting on Tuesday. But officials this week played down the importance of any single data point and stressed their determination to keep raising rates until inflation, which has been at 40-year highs, continues to decline .
Although the economy has slowed down under the influence of aggressive monetary tightening by the Federal Reserve, it has raised the benchmark overnight interest rate 225 ) Basis for the year – the job market remains strong and overall growth appears to have rebounded after a lull in the first half of the year.
“I believe the policy decisions at our next meeting will be straightforward… There is currently no trade-off between the Fed’s employment and inflation targets, so we will continue to be aggressive Fight inflation,” Waller said. “Inflation is pervasive due to strong demand that is only just beginning to slow, continued lag in labor force participation, and supply chain issues that may have improved in some areas but remain fairly severe.”
Traders of contracts tied to the Fed’s policy rate see a probability that policymakers choose to raise rates by 90% to be about 90 instead of 50 the basis point of the month. A three-quarters rate would be the third straight rate hike of that size and raise the federal funds rate above 3. 00%First time since 2008.
St. In comments to Bloomberg, St. Louis Fed President Bullard reiterated his call to raise interest rates by 75 basis points at the meeting, saying recent data showing continued strong job growth makes him ” Tends to be more
Inflation data
Kansas City Fed President Esther George comments at Peterson Institute for International Economics, at next The meeting did not state a preference for any particular size of rate hike, but said she preferred “stability and purpose over speed.”
Meanwhile, Waller said in Vienna , the Fed would be wrong to talk too much about the policy path from there, as upcoming data could quickly reshape expectations.
Economic Scientists and investors expect the Fed to stop raising rates once the policy rate is just above 4.00%.
But “if inflation doesn’t slow or rise further this year, then in my view the policy rate may need to be well above 4 percent,” Waller said in the Austrian capital. “If inflation decelerates suddenly, then in my view, Policy rates are likely to peak below 4%. ”
