Key for markets: Fed authorities stress that more rate hikes are essential

the fed “He has come a considerable way in taking policy from an ultra-expansive to a restrictive stance, but I think more needs to be done”said Cleveland Fed President Loretta Mester in a speech.

“The incoming data has not changed my view that we will have to get the fed funds rate above 5% and keep it there for some time.” in an attempt to bring inflation back to the 2% target, he said.

When the Fed met earlier in the month to deliberate on rate policy, it eased the pace of what had been a barrage of hikes and raised its overnight rate target by a quarter of a percentage point, to between 4.5% and 4.75%.

The Fed pointed out that more rate hikes will come to help reduce inflation levels too high to the 2% target.

But after that meeting, data showed unexpectedly high levels of job creation in January that raised questions about whether the job market has slowed as much as Fed officials think necessary.

Meanwhile, on Tuesday, the January consumer price index did not ease as much as economists had predicted, keeping pressure on the central bank to further increase borrowing costs.

Markets: inflation tests

Some other Fed officials have said in recent comments that they agree to more limited rate hikes, but others have said the Fed may have to raise rates further and keep them there longer if inflation doesn’t kick in. to move significantly toward the goal.

In materials for a presentation Thursday, St. Louis Fed chief James Bullard did not offer an opinion on what’s next for monetary policy, but did say central bank action is important to ensure that pressures inflation rates continue to decline.

“Inflation is still too high, but it has come down,” Bullard said, adding that “continued policy rate increases can help block a disinflationary trend through 2023, even with continued growth and strong labor markets,” he added.

Bullard is not voting on the Fed’s monetary policy committee panel this year.