Fed’s Cook, Harker Still Support Aggressive Stance

On Thursday, Federal Reserve Governor Lisa Cook said that inflation in the US is still remains unacceptably high and interest rates will need to keep rising to get it under control.

According to Cook, “Inflation is too high, it must come down and we will keep at it until the job is done”, she also noted, during opening remarks at a panel discussion with business and community leaders in Spartanburg, South Carolina, this likely will require ongoing rate hikes and then keeping policy restrictive for some time”. She noted ongoing rate increases will be required.

The US dollar index weakened below the 113 mark, on Thursday, to the 112.16 low before recently picking up to a recent high of 112.80. Meanwhile, earlier this session, the dollar traded at its highest level against the Japanese yen in more than 30 years, crossing the 150.00 psychological level. After the said decline following the beginning of the American session, the US Dollar trimmed losses.

On Thursday also, Philadelphia Fed President Patrick Harker said policymakers are not done with raising its short-term interest rate target amid very high levels of inflation. He added the Fed will find space “next year to pause the tightening process”. According to him, the interest rate will be above 4% by the end of 2022.

Additional Quotes:

“We have also raised the federal funds rate 300 basis points since the start of 2022. That means the Fed is actively trying to slow the economy. But we are going to keep raising rates for a while”.

“Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4 percent by the end of the year”.

“The Fed is actively trying to slow the economy”.

“We are going to keep raising rates for a while”.

“Sometime next year, we are going to stop hiking rates. At that point, I think we should hold at a restrictive rate for a while to let monetary policy do its work. It will take a while for the higher cost of capital to work its way through the economy”.

“Inflation will come down, but it will take some time to get to our target. I expect PCE inflation to come in at around 6 percent in 2022, around 4 percent next year, and 2.5 percent in 2024”.