WASHINGTON — A member of the Federal Reserve Board said Friday that the fight against inflation, which has lasted for more than a year, has not led to significant progress and that further increases in the base discount rate are needed to hold down prices. increase.
Fed board member Christopher Waller, who also sits on the Open Market Committee that decides rate changes, did not say how many more rate hikes he was willing to support, noting that the inflation “is still too high”.
Inflation slowed in March, leading to lower food and fuel prices, but excluding these volatile categories, “basic” prices continue to rise and are now 5.6% higher than those of ‘one year ago. Waller pointed out that underlying prices have risen at about the same rate, if not more, since December 2021.
Waller’s announcement follows Wednesday’s forecast by Fed economists that the United States is heading for a “mild recession” this year.
Several of Waller’s colleagues have said in recent weeks that they support at least one more rate hike. This will bring the discount rate to around 5.1%, the highest in 16 years.
Interest rate futures traders expect the Federal Reserve, which acts as the US central bank, to raise interest rates one last time at its next board meeting, according to CME Fedwatch Tool analysis. These expectations reflect assumptions of the economy sliding into recession, ie a drop in GDP growth, which will force the Fed to lower the rate.
Waller, however, said little progress in tackling inflation means “monetary policy is likely to remain tight for a long time, and longer than markets expect.”
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