Federal Reserve officials are continuing with their hawkish tones amidst strong economic data releases and have cautioned interest rates may increase further and continue to stay at higher levels into next year.
Atlanta Fed President Raphael Bostic wrote in an essay that interest rates would need to rise to between 5% and 5.25% and then stay there until well into 2024, reported Bloomberg.
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"This will allow [a] tighter policy to filter through the economy and ultimately bring aggregate supply and aggregate demand into better balance and thus lower inflation," he wrote.
"History teaches that if we ease up on inflation before it is thoroughly subdued, it can flare anew," Bostic said adding, "That happened with disastrous results in the 1970s."
Federal Reserve Bank of Minneapolis President Neel Kashkari has yet to take a call on whether he will support accelerating the central bank's interest-rate hikes later this month.
"I'm open-minded, at this point, about whether it's 25 or 50 basis points," Kashkari said Wednesday. "To me, much more important than whether it's 25 or 50 is what we signal in what's called the dot plot," he added, referring to the central bank's quarterly forecast for the path of its benchmark policy rate.
"We're not yet seeing much of a sign of our interest-rate increases slowing down the services sector of the economy and that is concerning to me," Kashkari said. "Wage growth is at a level that it actually is too high to be consistent" with the 2% inflation target, he added.
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