Growing evidence that high inflation is finally easing shows that the Fed's interest rate hikes are working as intended, Federal Reserve Bank of Cleveland President Loretta Mester told AP. But, the key policymaker says more hikes are still needed.
As a result, Mester’s views provide a measure of how far the Fed’s more hawkish policymakers might be willing to go in their drive to tame inflation. Consumer price increases, as calculated by the government, have steadily eased from a four-decade high of 9.1% in JuneYet because the Fed’s own inflation target is much lower — 2% — its policymakers have penciled in further rate increases.
Mester, 64, also stressed her belief that more hikes are needed and that the Fed’s key rate should rise a “little bit” above the 5% to 5.25% range that policymakers have collectively projected for the end of this year. Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said that quarter-point hikes “will be appropriate going forward.” Two other Fed regional bank presidents — Susan Collins of the Boston Fed and Raphael Bostic of the Atlanta Fed — also said they were leaning toward a quarter-point increase.
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