Fed members skeptical about rate break – E24

Several Fed rate committee members have expressed skepticism about a rate break, but there are signs of discord in the committee.

When Fed Chairman Jerome Powell last week raised the key interest rate for the 10th consecutive time, he remained open to the possibility of a rate break.

Last week, the interest rate market predicted a third chance of an interest rate increase, a possibility that was lowered this week to a tenth chance, he writes. Reuters.

Federal Reserve Board member Philip Jefferson, recently nominated vice president by President Joe Biden, said in a speech that inflation in the United States remains too high, although there are signs that the economy is losing momentum.

Aside from energy and food, improving inflation remains a challenge, Jefferson said when speaking to the National Association of Insurance Commissioners, according to Reuters.

The news agency interprets Jefferson’s adoption of the idea of ​​tightening monetary policy as his support for further interest rate increases. However, Jefferson also indicated that he expected the economy to lose momentum, and that interest rate hikes would be felt.

– Not there today

Dallas Fed President Lori Logan is also waiting to break interest rates.

Numbers coming in over the next few weeks may indicate that we can cancel a meeting. But we’re not there today,” she said when addressing an association of banks this week.

She said the decision would depend on inflation and jobs numbers to be released before the next interest rate meeting.

April numbers It shows that 253,000 new jobs were created outside of agriculture in the United States. Unemployment fell to 3.4 percent versus the expected 3.6 percent. When the numbers were presented, Knut A. Magnussen of DNB Markets told E24 that the numbers were in line with their expectations that the rate could be raised again.

Jefferson and Logan belong to one extremist extremist Hooker believes that interest rates must be kept high or raised to control inflation.The minority is in the Fed, while the majority has a less hawkish view of monetary policy.

Prepare a lot

The central bank raised interest rates in large and frequent jumps in an effort to curb soaring price growth. This should happen because higher interest rates discourage activity in the economy, and in the next phase relieve price pressure.

The new interest rate hike will push the policy rate into the range from 5.25 to 5.50. It will be higher than what the public deemed necessary in March.

We haven’t made the progress we need. We are far from 2 percent, Logan said, referring to the central bank’s inflation target.

Core inflation, which excludes energy and food products, eased as expected in April and fell at 5.5 percent. This is down from 5.6 percent in March.

A long way

In an interview with financial times St. Louis Fed President James Bullard says he is leaning toward favoring one more rate hike.

“I expect lower inflation, but it’s going slower than I would have liked, and that might justify raising the interest rate a bit more to make sure we have inflation under control,” he says.

– The main danger is that inflation does not go down, turn around or go up, as it was in the 1970s, he says.

Central Bank Governor Jerome Powell said at the press conference that followed the decision earlier in May that there was still a long way to go before inflation fell to 2%.

The phrase “further emphasis may be appropriate” has been removed from previous press releases. Many US media, including The Wall Street Journal, interpreted this as a possible pause in raising interest rates.