A run of strong economic data and signs that inflation remains stubbornly high could lead the Federal Reserve to raise its benchmark rate higher in the coming months than it has previously forecast, several Fed officials say
On Thursday, Christopher Waller, a member of the Fed’s influential Board of Governors, said that if the economy continued to show strength and inflation remained elevated, the central bank would have to lift its key rate above 5.4%. That would be higher than Fed officials had signaled in December, when they projected it would peak at roughly 5.1% this year.
The Fed’s goal is to cool the economy by raising the cost of borrowing and slowing business and consumer spending. More modest growth probably would help slow inflation to the Fed’s 2% target. Fed officials next meet March 21-22, when they are expected to raise their key rate by a quarter-point to about 4.9%.
“Although inflation has been coming down since the middle of last year,” Waller said, “the recent data indicate that we haven’t made as much progress as we thought.”America’s employers added a stunning 517,000 jobs in January, a surprisingly strong gain in the face of the Federal Reserve’s higher interest rates.
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