Kansas City Fed President Esther George said in a CNBC interview that she has raised her forecast on interest rate to over 5%. Also, “I see staying there for some time, again, until we get the signals that inflation is really convincingly starting to fall back toward our 2% goal”. Interest rate will stay above 5% well into 2024.
“Where we really see the persistence in that inflation seems to be in the non-housing part of the services side of the economy,” George said. “So, I think that’s going to be where I’ll be watching for the real clues to see whether we are getting traction with our policy in that area.”
“I’m not forecasting a recession, but I’m quite realistic that when you see below-trend growth — and the idea that our instrument is going to work on demand, bringing that down — it doesn’t leave a lot of margin there,” George said. “Not my forecast, but I do understand that bringing demand down creates that sort of possibility.”
Fed Bostic: There is still much work to do
Atlanta Fed President Raphael Bostic inflation is “way too high” in the US and the FOMC remains “determined to use our policy tools to bring inflation back toward our objective.”
“I appreciate recent reports that include signs of moderating price pressures, but there is still much work to do,” Bostic added. “The most recent report showed the Fed’s preferred measure of inflation running at a 5.5% annual rate.”