At least two Federal Reserve policy-makers advocated more patience over monetary tightening as Chairman Jay Powell took to Congress to reiterate the apparent consensus at the US central bank that more aggressive action was needed on interest rates to fight inflation
WASHINGTON (Pakistan Point News / Sputnik - 22nd June, 2023) At least two Federal Reserve policy-makers advocated more patience over monetary tightening as Chairman Jay Powell took to Congress to reiterate the apparent consensus at the US central bank that more aggressive action was needed on interest rates to fight inflation.
"If we simply press on with additional rate hikes, we could needlessly drain too much momentum from the economy," Federal Reserve bank of Atlanta President Raphael Bostic said on Wednesday. "Policy hasn't been restrictive long enough for effects to hit, so it's prudent to wait."
Bostic's colleague Austan Goolsbee, who's president of the Federal Reserve Bank of Chicago, also indicated a wish to procrastinate over interest rates, to see whether more than a year of monetary tightening by the central bank would temper inflation without the need for more action.
"A reconnaissance mission is a perfectly appropriate thing to do," Goolsbee said, adding that it takes time for the interest rate hikes to work its way through the economy.
The comments by Bostic and Golsbee represent a pushback somewhat to Powell's testimony before Congress, where he said that nearly all policy-makers at the central bank think there should be more interest rate hikes to curb inflation. Powell's remarks signaled that the June pause of the Fed year-long campaign of monetary tightening was just that - a pause.
The Fed will make its decision on interest rates during the scheduled meting on July 26. Many economists predict the Fed will add another quarter percentage point at that meeting to interest rates, bringing them to a peak of 5.5%.
The Consumer Price Index, the broadest gauge for US inflation, grew by 4% in the year to May, expanding at its slowest pace in more than two years. The Personal Consumption Expenditures Index, the Fed's preferred inflation gauge, meanwhile, grew by 4.4% in the year to April. Both are, however, at least twice above the Fed's 2% target for annual inflation.
