Kansas City Fed President Says Rates Should Be Raised to Curb Demand

The Federal Reserve of the United States has not yet raised interest rates to levels that weigh on the economy and may need to raise them above 4% for a while, Kansas City Fed President Esther George said.

“It is very important that we are clear in our communication about where we are going,” she told Michael McKee and Kathleen Hays in an interview with Bloomberg Television in Jackson Hole, Wyoming, where she is hosting the annual Fed retreat.

George says there is “way to go” to raise rates until there is evidence that the inflation is falling.

“We have to raise interest rates to slow demand and bring inflation back to our target,” said George, who is voting on monetary policy this year. The interview was recorded on Wednesday.

Asked by how much the Fed should raise rates, George said there was “further way to go” and rejected bets in financial markets that the central bank would start cutting rates next year.

“I think we will have to hold on, it could be more than 4%. I don’t think that’s out of the question,” she said. “I think we won’t know until we start to see signals in the data.”

Fed Chairman Jerome Powell, who will lead the prestigious symposium with a speech this Friday morning, is expected to reaffirm his determination to continue tightening monetary policy to combat inflation.

The Banco Central The United States is rapidly raising interest rates to curb the most intense price pressures in 40 years.

Fed officials raised 75 basis points at each of their last two meetings and have said a similar hike could be discussed again when they meet next month, depending on the data. They will have updated figures on consumer prices and employment between now and the meeting.

George saw some signs of cooling demand, but “it’s certainly not fully showing in the inflation data yet. There is still a very broad base, and I think it tells us that there is more work to do.”

US consumer prices rose 8.5% in the past 12 months through July. The Fed is targeting a different index, called the personal consumption spending price index, which rose 6.8% in the year to June.

“We want financial conditions to adjust along with the direction in which we are moving policy,” he said.

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