(Washington) An official of the American central bank (Fed) reiterated on Friday that rates would probably have to be raised further this year to succeed in curbing inflation in a sustainable manner, and to remain at a high level for longer than expected.
“Inflation is still too high, and I think it will likely be appropriate for the committee to raise rates further and keep them at a restrictive level for some time to bring inflation back to our 2.0 percent target. said Michelle Bowman, a Fed governor, during a speech to bankers in Vail, Colorado.
The Fed’s monetary policy committee, the FOMC, met on Tuesday and Wednesday, and announced that rates will be kept at their current level, in the range of 5.25-5.50%.
However, they anticipate an additional increase by the end of 2023, and rates slightly above 5.0% in 2024, a higher level than expected.
Because the slowdown in inflation could be less rapid than hoped, it should remain “above 2% at least until the end of 2025”, underlined Michelle Bowman.
After slowing for a year, inflation rebounded this summer in the United States, due in particular to the global rise in oil prices.
“I see a continuing risk that energy prices will rise further and reverse some of the progress we have seen on inflation in recent months,” the governor warned.
“Given the mixed data — strong spending, but falling inflation and downward revisions to jobs created in previous months — I supported the FOMC’s decision to keep rates steady , Wednesday, she said.
This member of the Board of Governors of the Fed also mentioned the spring banking crisis, which followed the bankruptcy in March of Silicon Valley Bank (SVB), and led to a tightening of credit conditions.
“Despite this tightening of bank lending standards, we have not observed signs of a sharp credit contraction that would significantly slow down economic activity,” she detailed.
Since March 2022, the Fed’s main rate has been raised 11 times, a very rapid pace.
Inflation stood at 3.7% year-on-year in August, according to the CPI index. The Fed-favored PCE index was 3.3% in July, August data will be released on September 29.
