Vincent Alban via Bloomberg
The Key Takeaways
- Federal Reserve officials are confident that the inflation will reach a rate of 2% annually due to a recent slowdown in core prices.
- Separate speeches by three Fed officials on Tuesday indicated that the Fed is confident of a slow but steady decline in inflation.
- One non-voting member of the Fed's policy committee said the Fed should keep interest rates high for the time being to keep downward pressure on inflation.
In separate speeches Wednesday, members of the Federal Open Market Committee predicted inflation would fall to the central bank’s goal of a 2% annual rate—although possibly not for some time.
FOMC voting members Austan Goolsbee, president of the Chicago Fed and John Williams of the New York Fed, as well as non-voter Thomas Barkin of the Richmond Fed, said various economic data suggested inflation is cooling down, albeit gradually.
Fed members’ comments came hours after the Bureau of Labor Statistics published an official report about consumer prices for December. The Bureau of Labor Statistics showed that inflation had accelerated in this month. However, “core” For the first time since April, inflation, which does not include volatile food prices and energy costs, has fallen. Officials are more hopeful that rising prices will slow down.
“I’m pretty confident that we will get it to 2%,” Goolsbee said in an online Q&A event.
The Fed cut the key interest rate in September from its two-decades high level to boost the economy. This was done to prevent the recent labor market slowdown from leading into mass unemployment. The latest figures show that inflation is still stubborn, and the labor market continues to be booming. Financial markets are expecting the Fed not to cut rates further for now.
Bloomberg reports that Barkin made the same statement to reporters following an event on Wednesday. He stated that interest rates should remain in place. “restrictive” For the moment, they will remain high enough to continue impacting the economy and inflation.
Williams pointed out that the inflation rate today, which is in the range of 2-3%, is much lower than the CPI in 2022. In 2022 the CPI will reach 9.1% – its highest since 1981.
“That’s a dramatic fall, and the process of disinflation remains in train,” In prepared remarks, he made the following comments at an economic conference in Connecticut. “But we are still not at our 2% goal, and it will take more time until we can achieve that on a sustained basis.”
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