The U.S. Federal Reserve is contemplating additional interest rate hikes this year in response to persistent inflation, according to Governor Michelle Bowman’s remarks on Friday. Despite significant strides in curbing inflation, Bowman emphasized the need for continued efforts during a speech to banking professionals in Colorado.
This week, the Federal Reserve held its benchmark short-term interest rate steady within a range of 5.25% to 5.5%. However, it kept open the possibility of another rate hike before the end of the year if inflation fails to move closer to its 2% target. The current inflation rate is approximately double this goal.
Bowman, along with other high-ranking Federal Reserve officials, underlined the importance of maintaining elevated interest rates for an extended period until inflation aligns with this target.
In a surprising development for Wall Street, senior officials from the Federal Reserve projected only two rate reductions for the upcoming year, instead of the four initially anticipated in June. This forecast indicates a shift in the central bank’s strategy towards an increasingly hawkish stance.
Among the 19 top officials at the Federal Reserve, opinions differ regarding future steps. Twelve anticipate one more rate increase this year, while seven believe that interest rates have already reached their necessary peak.
Before making their next move, senior officials plan to examine forthcoming reports on inflation and employment growth carefully. These data will provide critical insights into the health of the U.S. economy and guide future monetary policy decisions.
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