Fed Governors Urge Further Interest Rate Hikes to Stabilize Economy
The US Federal Reserve has to keep raising interest rates to rein in inflation and restore balance between demand and supply in the economy, New York Fed President John Williams said on Tuesday.
“We need all the gears turning at the right pace to restore balance between demand and supply in the entire economy,” Williams said. That goal is still a ways off from being accomplished.
Fed Governor Michelle Bowman said Monday they still see a very strong labor market but added that there isn't much moderation in inflation as they would like.
“We are still far from achieving price stability, and I expect that it will be necessary to further tighten monetary policy to bring inflation down toward our goal,” Bowman said Monday at an American Bankers Association community-banking conference. It is probable that economic activity will be sluggish and there will be a decline in employment conditions if this is done.
Dallas Fed President Lori Logan expects the Federal Open Market Committee will need to continue gradually raising the federal funds rate “until we see convincing evidence that inflation is on track to return to our 2% target in a sustainable and timely way,” she said Tuesday in a speech at the Prairie View A&M University.
“The evidence I’m looking for to gain confidence in the inflation outlook includes some further and sustained improvement in the inflation statistics, as well as a clear change in the underlying factors — like the imbalance of aggregate supply and demand and resulting very tight labor market — that have been producing high inflation,” Logan said.
Logan stated that, despite having enough evidence for not raising rates, the Fed must remain flexible and raise them further if the economic outlook or financial conditions change. Conversely, if the labor market is tightened too quickly or too much, job losses could occur and have a greater impact on lower-income households.
0. “Fed governor estimates additional rate rises to battle infla…” MENAFN.COM, 14 Feb. 2023, https://menafn.com/1105569913/Fed-governor-estimates-additional-rate-rises-to-battle-inflation
1. “Fed's Williams calls to ‘stay the course' on rate hikes after inflation data” Yahoo News, 14 Feb. 2023, https://news.yahoo.com/feds-williams-calls-to-stay-the-course-on-rate-hikes-after-inflation-data-200418864.html
2. “Fed’s Bowman: It Is Possible We Will Still Be Able to Achieve a Soft Landing” Forex Factory, 13 Feb. 2023, https://www.forexfactory.com/news/1205346-feds-bowman-it-is-possible-we-will-still
3. “Fed’s Michelle Bowman Stresses Need for More Rate Increases” The Wall Street Journal, 13 Feb. 2023, https://www.wsj.com/articles/feds-michelle-bowman-stresses-need-for-more-rate-increases-ddb29be2
4. “Key Takeaways from President Williams's Speech on the Economic Outlook and Monetary Policy” tellerwindow.newyorkfed.org, 14 Feb. 2023, https://tellerwindow.newyorkfed.org/2023/02/14/key-takeaways-from-president-williamss-speech-on-the-economic-outlook-and-monetary-policy-4/
5. “Fed's Logan says most important risk facing central bankers ‘is that we tighten too little'” MarketWatch, 14 Feb. 2023, https://www.marketwatch.com/story/feds-logan-says-most-important-risk-facing-central-bankers-is-that-we-tighten-too-little-b15134af
6. “Dallas Fed's Lori Logan looking for ‘convincing evidence' inflation is on track to 2%” Seeking Alpha, 14 Feb. 2023, https://seekingalpha.com/news/3935789-dallas-feds-lori-logan-looking-for-convincing-evidence-inflation-is-on-track-to-2
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