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    Fed Officials Signal Need for Further Interest Rates Hikes to Beat Inflation


    Federal Reserve officials are indicating that the US central bank may need to keep gradually raising interest rates in order to beat inflation. This comes after data showed signs of persistent price pressures, leading traders to increase their bets for more hikes from the Fed.[0] Currently, markets expect a 25-basis-point hike at the Fed's March meeting, with a probability of 90.8%, according to the CME FedWatch tool.[1]

    St. Louis Fed President James Bullard and Richmond Fed President Thomas Barkin, two of the central bank’s most hawkish officials, said the case for a half-point interest-rate hike at the central bank’s meeting earlier this month was “compelling.” Data demonstrating that consumer prices had risen 6.4% from January of the previous year, surpassing economists' predictions and still distant from the Federal Reserve's 2% annual inflation goal, elicited brief responses from both parties. This goal is based on another metric.[2]

    Futures trading is indicating that the benchmark short-term borrowing rate will reach a “terminal” level of 5.36% this summer, which is higher than the 5.1% prediction committee members had in December, but is close to Bullard's estimation of 5.375%.[3] Bullard said to CNBC that by increasing interest rates more drastically now, the Federal Open Market Committee would have a better opportunity to reduce inflation, which has come down since 2022 but is still elevated.[4]

    Thomas Barkin, President of the Richmond Federal Reserve, mentioned in an interview with Bloomberg TV that if inflation stays at a rate above their target, they may have to take further action.[2]

    Investors are concerned that if interest rates increase, it could cause an economic recession.[5] Tuesday saw the largest dip in major averages for the year, wiping out all the progress the Dow Jones Industrial Average had made in 2023.[5]

    At an event in Nashville, Tennessee, Governor Michelle Bowman declared that “the federal funds rate must be raised further until there is notable improvement in controlling inflation.” At its last three meetings, the Fed has decreased the rate of increases in rates; it began with 75 basis points in November, continued with 50 basis points in December, and most recently was cut to a quarter-point this month.[6]

    0. “Fed Officials Stress Need to Keep Raising Rates to Cool Prices” Yahoo! Voices, 17 Feb. 2023,

    1. “Federal Reserve is likely close to pausing rate hikes, Philly Fed's Harker says” Seeking Alpha, 14 Feb. 2023,

    2. “Fed Officials Float Even Higher Rates After Brisk Inflation Data” Yahoo News, 14 Feb. 2023,

    3. “Fed's Bullard: ‘Sharp' tightening of policy still needed to tame inflation By”, 22 Feb. 2023,

    4. “Fed's Bullard Urges More Hikes to Ensure Disinflation Continues” msnNOW, 16 Feb. 2023,

    5. “Fed's James Bullard Pushes for Faster Rate Hikes, Sees ‘Good Shot' at Beating Inflation” NBC Connecticut, 22 Feb. 2023,

    6. “Fed's Barkin backs sticking with 25-basis-point hikes in the future” MarketWatch, 17 Feb. 2023,

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