Comments on interest and inflation from Fed officials
Although the markets follow the verbal guidance of US Federal Reserve (Fed) officials, the authorities continue to receive various statements.
Chicago Fed President Austan Goolsbee said the Fed should be cautious about raising interest rates amid recent tensions in the banking industry. Minneapolis Fed President Neel Kashkari said he believes inflation will reach a range of 3 to 3.8 percent by the end of the year. Philadelphia Fed President Patrick Harker said it would take time for rate hikes to take effect.
Assessing how last month’s banking crisis will affect current conditions, Chicago Fed President Austan Goolsbee said the Fed must be “prudent and patient” in raising interest rates.
“I think we need to be careful given the uncertainty about where these financial headwinds are headed,” Goolsbee said yesterday at the Economic Club of Chicago event.
“We need to collect more data and be careful about raising rates aggressively until we see how effective the current situation is in bringing down inflation,” Goolsbee said.
‘INFLATION WILL REMAIN AT THE TARGET’
Minneapolis Fed President Neel Kashkari said there were signs that the turmoil in the banking industry last month was subsiding after the collapse of Silicon Valley Bank.
“I’m not ready to lay the record straight, but there are encouraging signs that these risks are now better understood and calm restored,” Kashkari said at an event at Montana State University yesterday.
Kashkari said the Fed’s interest rate hike and a possible credit squeeze following two bank failures last month could trigger a recession, but allowing inflation to stay high would be even worse for the job market.
Kashkari said he is not so optimistic and believes inflation will hit a range of 3 to 3.8 percent by the end of this year, well above the Fed’s 2 percent target, based on the Fed’s current preferred measure. .
FED OFFICIAL DESIRED TIME
Philadelphia Fed President Patrick Harker also said in a conference speech that he felt the Fed would soon end the fastest monetary tightening since the 1980s by raising interest rates above 5 percent.
“Given that the full impact of monetary policy actions can take up to 18 months to manifest in the economy, we will continue to closely examine the available data to determine what, if any, additional action we should take,” Parker said. .
Harker, who said he felt the end of interest rate hikes could be near, said: “I’m all for the Fed raising the interest rate above 5 percent and keeping it there for a while.” .
WHAT HAPPENED?
Fed officials raised interest rates by 75 basis points four times last year. The bank had reduced the pace of rate hikes to 50 basis points in December and 25 basis points in February. The March meeting, which took place after the failure of Silicon Valley Bank and two other US banks, also increased by 25 basis points.
Consumer inflation (CPI) for February in the US was 6 percent annually. Core inflation was 5.5 percent annually and 0.5 percent monthly. Monthly inflation was 0.5 percent. March inflation is expected to be announced today at 15:30. The data will give clues about the Fed’s moves.