Two Federal Reserve officials warned of a further sharp rise as central banks struggle to bring down decades of high inflation. It suggests that rate hikes are on the way.
San Francisco Fed President Mary Daly said on Sunday that the Fed's efforts to lower prices were "not over yet." Mr. Daley is a rotating member of the Federal Open Market Committee but will not be voting this year.
Daly also said he could "absolutely" raise rates by 0.5% when the Fed next meets in September. The central bank raised its benchmark interest rate by three-quarters of a percentage point above normal last month after inflation soared to 9.1%.
"You have to keep an open mind. Now she has two inflation reports, another job her report," Daly said Sunday. Said during an appearance on "Face The Nation."
“Americans are losing ground every day. , we must focus on bringing down inflation," Daly added.
Federal Reserve Governor Michelle Bowman was also hawkish in her economic remarks last Saturday, advocating further interest rate hikes of a similar magnitude until inflation is contained.
27}, Bowman said in a prepared remarks to the Kansas Bankers Association, "Until we see inflation falling in a consistently meaningful and lasting way, we need to consider increases of similar magnitude. I think there is," he said.CNBC.
Following July employment data , the market was betting on his Fed's stronger action, indicating a red-hot labor market. U.S. employers said he added 528,000 jobs in July. This far exceeded economists' expectations, with wages rising 5.2% year-on-year.
Strong employment data could prompt the Fed to continue aggressive rate hikes to ensure the economy cools enough to keep prices down.
The market is now setting a 69.5% probability of a three-quarter percentage point hike in September, according to CME Group data.
Mr. Bowman is also not convinced the economy has reached so-called 'peak inflation' even after June's consumer price index showed prices at their highest level since 1981.
There are few concrete signs to support this forecast, and we need to see clear evidence of this decline before we can incorporate easing inflationary pressures into our outlook.” she added.
Labor Department announced her July consumption on Wednesday. Announcing the Consumer Price Index. According to Dow Jones, economists expect him to fall slightly to 8.7%.
Federal Reserve Chairman Jerome Powell said the central bank will rely heavily on data to assess the pace of rate hikes in the coming months.
"We expect continued increases in the federal funds rate target range to be appropriate,"Powell said at a press conference last month. "The pace of these increases will continue to depend on incoming data and the evolving outlook for the economy."
"At the next meeting, an even more unusually large increase may be appropriate. , it's a decision that depends on the data available at the time," he added.
The Federal Reserve (Fed) has faced widespread criticism in the past for its response to inflation, with skeptics accusing the central bank of delaying too much in addressing the problem. He argues that a sharp interest rate hike could plunge the U.S. economy into recession.
One such skeptic is well-known economist Mohamed El-Erian, who said on Sunday that core inflation will remain his 2% target for the Fed until the end of the year. He said he expects it to be much higher.
"My biggest concern is the collateral damage from lower inflation as the Fed reacts too slowly," he told El-Erian he told Yahoo Finance. said.
