Inflation is still “stubbornly high,” and the Federal Reserve will raise interest rates as much as necessary to bring price pressures back under control, a senior central bank official said on Friday.
Senior Federal Reserve officials say they are determined to squash “stubbornly high,” inflation even if it requires higher interest rates and steeper unemployment to bring price pressures back under control.
“I don’t know why markets are so optimistic about inflation,” said Daly, referring to recent optimism among investors that the Fed was finally gaining the upper hand. The Fed also signaled it plans to raise the so-called fed-funds rate to as high as 5.25% in 2023. Williams said his colleagues expect it to get to 5% to 5.5% next year.In market parlance, a real interest rate is one that is above inflation. The rate of inflation right now, using the Fed’s preferred PCE price gauge, is 6%. That’s markedly higher than the current 4.25% to 4.5% fed-funds rate.
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