Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

Fed Officials Float Even Higher Rates After Brisk Inflation Data

Published Feb 14, 2023 12:13PM ET Updated Feb 14, 2023 12:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Bloomberg. Runners pass the Marriner S. Eccles Federal Reserve building in Washington, D.C., U.S., on Monday, Aug. 13, 2018. Federal Reserve officials left U.S. interest rates unchanged in August and stuck with a plan to gradually lift borrowing costs amid strong growth that backs bets for a hike in September.
 
US500
+0.31%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FOE
+0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(Bloomberg) -- Federal Reserve officials said interest rates may need to move to a higher level than anticipated to ensure inflation continues to fall, after fresh data showed prices rose at a brisk pace last month.

Richmond Fed President Thomas Barkin, speaking in a Bloomberg TV interview Tuesday, said that “if inflation persists at levels well above our target, maybe we’ll have to do more.”

Dallas Fed President Lorie Logan said: “We must remain prepared to continue rate increases for a longer period than previously anticipated, if such a path is necessary to respond to changes in the economic outlook or to offset any undesired easing in conditions.” She spoke at Prairie View A&M University in Texas.

They both commented shortly after data showed consumer prices climbed 6.4% in January from a year earlier, still far above the Fed’s goal for 2% annual inflation, which is based on a separate measure.

The overall consumer price index climbed 0.5% from December, bolstered by gasoline and shelter costs. That was in line with economists’ expectations, but marked the biggest increase in three months.

“Inflation is normalizing but it’s coming down slowly,” Barkin told Bloomberg’s Jonathan Ferro (NYSE:FOE) and Michael McKee.

While both Barkin and Logan participate in meetings of the Fed’s policy committee, Logan has a vote this year and Barkin does not.

Fed officials have been raising rates aggressively to try to cool inflation that hit a 40-year high last year. Officials in December penciled in a peak interest rate of about 5.1% this year, based on the median forecast.

At the start of February, they lifted their benchmark lending rate by a quarter of a percentage point to a range of 4.5% to 4.75%. That followed a half percentage-point increase at their December meeting, which came after four consecutive jumbo-sized 75-basis-point hikes. 

Market Reaction

The S&P 500 Index fell and Treasury yields jumped following the latest inflation data. Investors now give near-even odds that Fed officials will raise rates by a quarter percentage point in June, following similar increases in March and May.

Expectations for where interest rates will peak have risen following stronger-than-expected jobs figures and continued signs of persistently high prices.

Logan said she sees two risks to monetary policy right now: doing too little and causing an inflation comeback and doing too much and creating excess pain in the labor market. The “most important” risk is doing too little, she said.

Policymakers have been particularly worried by increases in services prices, driven in part by a shortage of workers exacerbated by the Covid-19 pandemic.

Fed Chair Jerome Powell has cautioned that an easing in a too-tight labor market would be needed to cool continuing price pressures. Nonfarm payrolls increased 517,000 last month – more than twice the expectations of Wall Street – and the unemployment rate dropped to 3.4%, the lowest since May 1969.

There are some indications that economic growth could be more resilient than expected, or even accelerating. The Atlanta Fed’s tracker has put an early estimate of first-quarter gross domestic product growth at a 2.2% annualized rate, as of Feb. 8.

“You have seen demand moving very quickly” in some sectors, Barkin said Tuesday.

©2023 Bloomberg L.P.

Fed Officials Float Even Higher Rates After Brisk Inflation Data
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Joshua Thompson
Joshua Thompson Feb 14, 2023 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Insane that people take the NFP announcement seriously.   Go read it.  -2.5 million jobs and unemployment of 3.9%.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email