(Washington) A governor of the American Federal Reserve (Fed) estimated Tuesday that it would undoubtedly be necessary to raise rates further to bring inflation back on track in the United States, but another governor of this institution is nevertheless shown to be a little more optimistic.
“My economic forecast continues to project that we will need to raise rates further to keep policy tight enough to bring inflation back to our 2% target in due time,” Fed Governor Michelle Bowman said at a conference in Salt Lake City, Utah.
The Fed’s preferred inflation measure, the PCE index, will be released on Thursday for the month of October. The CPI index, published earlier in the month, showed a sharp drop in inflation last month, to 3.2% year-on-year.
Ms. Bowman welcomed “significant progress in reducing inflation, without harming the strength of the labor market or economic activity.”
But it also noted “uncertainties surrounding (its) economic forecasts, which will influence (its) vision of appropriate monetary policy in the future”.
The next Fed meeting is December 12-13. A maintenance of rates in their current range of 5.25 to 5.50% is mainly expected by market participants, according to CME Group estimates.
“We do not yet know the full extent of the effects of tighter monetary policy and financial conditions on economic activity and inflation,” Bowman said.
Another Fed governor, Christopher Waller, speaking to business leaders in Washington on Tuesday, said he was “increasingly convinced that policy is currently well positioned to slow the economy and bring inflation at 2%.”
But he too highlighted “great uncertainties (which) remain regarding the pace of future activity.”
“So I can’t say with certainty whether (the Fed) has done enough to achieve price stability,” he cautioned.
He said he was “encouraged by the first signs of moderation in economic activity in the fourth quarter”, but noted that “inflation remains too high” and that “it is too early to say whether the slowdown we we observe will be sustainable”.