Fed may need to push policy rate above 4.75% -Kashkari By Reuters
2022-10-19 07:55:23
more 
409

By Ann Saphir

(Reuters) -The Federal Reserve may need to push its benchmark policy rate above 4.75% if underlying inflation does not stop rising, Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday.

"I've said publicly that I could easily see us getting into the mid-4%s early next year," Kashkari said at a panel at the Women Corporate Directors, Minnesota Chapter, in Minneapolis.

"But if we don't see progress in underlying inflation or core inflation, I don't see why I would advocate stopping at 4.5%, or 4.75% or something like that. We need to see actual progress in core inflation and services inflation and we are not seeing it yet."

Most Fed policymakers expect to need to raise the policy rate, now at 3%-3.25%, to 4.5%-5% by early next year, based on projections published last month and comments made publicly since then.

Kashkari's remarks signal a readiness to go even further.

"That number that I offered is predicated on a flattening out of that underlying inflation," Kashkari said. "If that doesn't happen, then I don't see how we can stop."

So far, data suggests underlying inflation is rising, not falling, despite the Fed's aggressive rate hikes this year.

Based on recent readings of the consumer price index and other data, economists estimate the core personal consumption expenditures (PCE) price index, which the Fed watches closely, rose 5.1% last month from a year earlier, compared with 4.9% in August.

The data will be published just a few days before the Fed's next policy meeting on Nov. 1-2.

Last month Fed policymakers penciled in core PCE to register 4.5% at year's end and overall inflation to be 5.4%. The Fed targets 2% overall inflation.

With inflation high, the central bank is widely expected to deliver a fourth straight 75-basis point rate hike when it next meets, and traders of futures contracts tied to the policy rate are betting on another large rate hike in December as well.

Statement:
The content of this article does not represent the views of fxgecko website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!

Related News

您正在访问的是FxGecko网站。 FxGecko互联网及其移动端产品是中国香港特别行政区成立的Hitorank Co.,LIMITED旗下运营和管理的一款面向全球发行的企业资讯査询工具。

您的IP为 中国大陆地区,抱歉的通知您,不能为您提供查询服务,还请谅解。请遵守当地地法律。