Fed Vice Chair: Central Bank ‘May Take More Time’ Before Another Rate Hike
The Federal Reserve Bank will wait to evaluate incoming economic data before deciding whether to raise interest rates again, according to Fed Vice Chair Philip Jefferson.
“As we look ahead, my view is that any future adjustments in policy should be determined by carefully examining trends in the data, the evolving outlook, and the balance of risks,” Jefferson said Thursday at the University of Virginia’s Darden School of Business.
The Hill reported that Jefferson later said, “My colleagues and I will need to come to our own judgment, which may take more time.”
Annual inflation, as measured by the personal consumption expenditures (PCE) price index, was 3.4% in August, according to Bureau of Economic Analysis data released last week. Core PCE prices, which exclude more volatile food and energy prices, were up 3% year-over-year.
Since the Federal Open Market Committee (FOMC) voted unanimously in September to hike interest rates by a quarter point to fight inflation, multiple committee members have signaled future rate increases are on the horizon.
‘Modest Further Tightening’
Anna Paulson, president of the Federal Reserve Bank of Philadelphia, said the Fed may need to do “some modest further tightening” of monetary policy to bring inflation back down to its 2% target.
“In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion,” Michael Barr, a member of the central bank’s board of governors, said Tuesday at the Detroit Economic Club.
Fed officials have noted they will continue to track economic data prior to making a decision, however. Before the FOMC’s next meeting Oct. 27-28, the Bureau of Labor Statistics is scheduled to release data for the consumer price index, another gauge of inflation.
Federal Reserve Bank of New York President John Williams said at an event last week at the University of Buffalo that the “accumulation of more data” will help the committee decide on the “appropriate setting of monetary policy.”
Williams added, “If the economy evolves in a manner broadly consistent with my forecast, one further upward adjustment of the federal funds target range may be appropriate late this year to support a timelier return of inflation to target.”
Price Growth Still a Concern
Minneapolis Federal Reserve President Neel Kashkari said Wednesday that price growth is still a concern despite the latest economic data coming in cooler than economists predicted.
“Inflation is still too high,” Kashkari told CNBC’s Steve Liesman in an interview at a Council on Foreign Relations event in New York.
Kashkari’s comments after Wednesday morning’s release of the August personal consumption expenditures price index, known as the Fed’s preferred gauge of inflation.
