Fed policy on right track, but inflation still too high, officials say

The Federal Reserve is getting interest rates closer to where they need to be to win the battle against inflation, a pair of U.S. central bankers said on Friday, though neither gave a clear signal on whether they feel they have reached that point.

Coming a week after Fed policymakers raised their target range for the benchmark rate to 5%-5.25%, the remarks – from Fed Governor Philip Jefferson and St. Louis Fed President James Bullard — suggest some uncertainty about whether the Fed will in fact pause interest-rate hikes next month, as is widely expected.

Indeed a third U.S. central banker speaking early in the day, Governor Michelle Bowman, signaled she feels further policy tightening may yet be appropriate, unless inflation drops more convincingly.

The Fed has raised its benchmark interest rate five full percentage points over the past 14 months – the fastest pace of tightening in 40 years.

Inflation by the Fed’s preferred measure has eased from 7% last summer to 4.2%.

Meanwhile unemployment, which had been expected to rise as borrowing costs surged, has instead fallen to 3.4%, the lowest since 1969.

This report’s information was first seen on REUTERS; to read more, click this link.