A top Federal Reserve official on Friday expressed disappointment with the U.S. January inflation data, saying the central bank needs to continue raising interest rates to bring down inflation that is “much too high.”
“I don’t think we’re seeing what we need to be seeing, especially with inflation,” said Fed Governor Michelle Bowman, in a moderated discussion at a Tennessee Bankers Association conference in Nashville.
The inflation data in January “is not tracking with consistently lower inflation,” she said.
Read: CPI shows U.S. inflation still sticky
Bowman always votes on the Fed’s interest-rate committee meetings.
Asked what she would need to see to be satisfied with the inflation outlook, Bowman replied: “a consistent decline in inflation.”
She said it looked like this consistent trend might have been in the offing late last year, but the January data threw a spanner in the works.
In addition to inflation, the surprising jump in the payroll employment in January suggests a strong economy, she said.
“I don’t see a slowing of the economy,” she said.
The Fed needs to continue to raise interest rates until they are sufficiently restrictive, Bowman said.
On Thursday, two of the more hawkish regional Fed presidents said they backed 50 basis point rate hikes at the last Fed meeting early this month.
This has led to some speculation that the Fed might return to more aggressive rate hikes in March. The central bank slowed the pace of rate hikes to 25 basis points on Feb. 1 after raising by 50 basis points in December and 75 basis points in November.
Read: Will the Fed return to 50 basis point rate hikes?
Stocks
DJIA,
SPX,
were moderately lower in mid-morning trading. The yield on the 10-year Treasury note inched down to 3.85% after hitting the highest yield of the year on Thursday.
Credit: marketwatch.com