(Washington) A governor of the American central bank (Fed) estimated Tuesday that a new rate increase could be necessary to curb inflation, if it does not slow down enough in the coming months.
“I still expect that we will need to raise rates further to bring inflation back to our 2.0% target,” said Michelle Bowman, a member of the Fed’s Board of Governors, during a conference before bankers in Columbus, Ohio.
She said she was “ready to support” this “at a future meeting if available data indicates that progress on inflation has stalled or is insufficient to bring inflation back to 2.0%”. .
Inflation stood at 3.4% annualized in September, according to the PCE index favored by the Fed.
On November 1, following its monetary policy meeting, the Fed nonetheless kept rates in the 5.25% to 5.50% range they have been in since July.
Ms. Bowman stressed that she “supported” this decision and judged that the rate “seems restrictive”, that is to say that it slows down economic activity.
“We have seen considerable progress in reducing inflation, but it remains high and recent numbers are uneven,” said the Fed Governor.
She also warned of “an ongoing risk that services inflation remains persistent,” and that “rising energy prices are reversing some of the progress made in reducing inflation.”
All the more so, she said, as “financial conditions have tightened since September”, stressing that “part of this tightening has occurred thanks to long-term bond yields”, which have risen sharply .
“We do not yet know the effects of tightening financial conditions on economic activity and inflation,” said Michelle Bowman, also reporting “an unusually high level of uncertainty”.
In the United States, however, economic data shows solid economic growth and a still strong job market. And “supply and demand in the labor market could be better balanced”, while the country has been experiencing a significant labor shortage for more than two years.
The next Fed meeting is scheduled for December 12-13. It will be accompanied by an update of economic forecasts.
Another Fed official, Lorie Logan, president of the Dallas branch, estimated Tuesday, during an energy conference in Oklahoma City (Oklahoma), that due to the resilience of the economy, “we will continue to need tight financial conditions to bring inflation down to 2.0%.”
His Chicago counterpart, Austan Goolsbee, told CNBC that “priority should not be given to GDP growth or employment growth”, but to “the inflation rate”.
Nevertheless, “there is the possibility of following what I call the golden path, according to which we could bring down inflation without recession”, he estimated.
