Lower Rate Hikes Ahead? How Fed Officials Reacted To December Inflation Data

Zinger Key Points
  • Richmond Fed President Tom Barkin said he was, in concept, supportive of a path that is slower but longer and potentially higher.
  • Philadelphia Fed President Patrick Harker said hikes of 25 basis points will be appropriate going forward.
  • Atlanta Fed President Raphael Bostic said moderating inflation gives him comfort the Fed could move more slowly.

Federal Reserve officials on Thursday reportedly sounded relief that inflation continued on its downward path in December, which could likely lead to a step down to a 25 bps interest rate hike at the FOMC meet in early February.

The consumer price index rose 6.5% in December, down from 7.1% in November, according to data from the Labor Department. Core inflation, which excludes volatile food and energy prices, was up 5.7% in December, in line with average economist estimates.

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Major Wall Street indices closed in the green on Thursday. The SPDR S&P 500 ETF Trust SPY closed 0.36% higher while the Invesco QQQ Trust Series 1 QQQ gained 0.54%. Here's how some central bank officials reacted to the data:

  • Richmond Federal Reserve President Tom Barkin said, “We are constraining the economy and presumably, in the process, constraining inflation. That means ... I can be a little more nuanced," according to a Reuters report. Barkin said he was "in concept supportive of a path that is slower but longer and potentially higher" depending on how inflation behaves.
  • Philadelphia Fed President Patrick Harker said in a speech that hikes of 25 basis points will be appropriate going forward. "I expect that...will be restrictive enough that we will hold rates in place to let monetary policy do its work," he said according to the Reuters report.
  • St. Louis Fed President James Bullard said at an event organized by the Wisconsin Bankers Association that “it is encouraging that we got some information today that went in the right direction."
  • Atlanta Fed President Raphael Bostic told CBS News that the December inflation data was "welcome news." "It really suggests inflation is moderating and that gives me some comfort that we might be able to move more slowly," he said according to the report.

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Posted In: Macro Economic EventsNewsEconomicsFederal ReserveInflationJames BullardPatrick HarkerRaphael BosticTom Barkin
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