WASHINGTON: US interest rates are likely to rise further, and will need to remain high to effectively tackle inflation, a top Federal Reserve official said Thursday.
“Some additional tightening may be needed to ensure policy is restrictive enough” to support the Fed’s dual mandate of keeping both unemployment and inflation low, Philadelphia Fed president Patrick Harker said in a speech in Pennsylvania, according to prepared remarks.
“Once we reach that point, which should happen this year, I expect that we will hold rates in place and let monetary policy do its work,” he said.
Harker is a member of the powerful Federal Open Markets Committee (FOMC), which sets the Fed’s benchmark lending rate.
The FOMC has raised interest rates nine times since March last year in a bid to bring record-high inflation down towards the Fed’s long-term target of two percent.
But despite these aggressive moves, which raised the Fed’s benchmark lending rate by almost five percentage points in just over a year, inflation remains well above target.
Harker’s calls to continue tightening monetary policy echo similar comments made in recent weeks by other FOMC members, including New York Fed president John Williams, and Fed governor Christopher Waller.
“I expect inflation to continue declining, landing somewhere between three percent and 3.5 percent this year,” Harker said, adding inflation was unlikely to fall to two percent before 2025.
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