Monday, June 5, 2023
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Fed's George says rates must be raised to slow demand

(Bloomberg) — Kansas City Fed President Esther George said the central bank has not raised interest rates to a level that would weigh on the economy and may have to temporarily raise them above 4% .

“It’s very important to be clear about our goals in our communications,” she told Michael McKee and Kathryn Hayes in an interview with Bloomberg Television in Jackson Hole, Wyoming, where she hosts the Fed Meeting. Annual Policy Retreat.

“We have to raise interest rates to slow demand and bring inflation back to our target,” said George, who voted on monetary policy this year. The interview was recorded on Wednesday.

Asked how high the Fed should raise interest rates, George said “there is more room” and rejected bets in financial markets that the central bank will start cutting rates next year.

“I think we’re going to have to hold — it could be more than 4%. I don’t think it’s impossible,” she said. “I don’t think you’ll know that until you start looking at the data for signs.”

Chair Jerome Powell, who leads the prestigious symposium in a Friday morning speech, expects Will reiterate his determination to continue tightening monetary policy to fight inflation.

The U.S. central bank is raising interest rates quickly to contain the hottest price pressures in 40 years.

Fed officials raised 50 basis points at their last two meetings and said the same problem could be repeated at next month’s meeting , depending on the data. They have new data on consumer prices and employment between now and then.

George sees some signs of cooling demand, but “of course, you haven’t quite seen it in the inflation data. It’s still very broad-based and I think that tells us there’s more Work to be done.”

U.S. consumer prices rose 8.5% months to July. The Fed is targeting another measure, called the Personal Consumption Expenditure Price Index, which rose 6.8% in the year to June.

policy,” she said. It has not yet been decided whether to support 75 or 40 an increase in September bps. -21 Policymaking FOMC meeting.

“At this point, I’ll throw in between the two coin,” he told The Wall Street Journal in an interview on Wednesday, published Thursday. “As policymakers, we all understand that inflation is a big problem and a challenge that we will do our best to address.

(Updated Bostic’s review of Wall Street Magazine in the last paragraph.)

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