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The Fed: Strong jobs report a sign Fed needs to do more to quell inflation, officials say

Two senior Fed officials said the bank still needs to raise interest rates higher to subdue inflation in the wake of a stunningly strong January jobs report. Read More...

Two senior officials at the Federal Reserve are saying the central bank needs to raise interest rates higher to help subdue inflation in the wake of a stunningly strong jobs report in January.

Atlanta Federal Reserve President Raphael Bostic said in an interview with Bloomberg on Monday that a robust labor market probably means “we have to do a little more work.”

“And I would expect that that would translate into us raising interest rates more than I have projected right now,” he said.

Neel Kashkari, president of the Minneapolis Fed, also stressed the need for higher rates.

“We know that raising rates can put a lid on inflation,” Kashkari said in an interview with CNBC on Tuesday morning. “We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”

Kashkari is a voting member this year of the Fed panel that sets U.S. interest rates. Bostic is not.

Another bank president, Mary Daly of the San Francisco Fed, took a wait-and-see approach in an interview on Friday.

Fed Chair Jerome Powell is expected to comment on the jobs report on Tuesday in a noontime interview at the Economic Club of Washington, D.C.

The Fed raised its policy interest rate again last week as part of a stepped-up fight to reduce inflation to pre-pandemic levels of 2% or less. The rate of inflation was running at a 6.5% pace at the end of 2022, based on the consumer-price index.

The Fed’s benchmark interest rate was lifted to a top end of 4.75% and is likely to go to a range of 5% to 5.25% before the central bank considers a pause to judge the effects of its strategy on the economy.

Bostic sees the fed-funds rate ending up around 5.1%, with Kashkari pushing for 5.4%.

Many analysts think a U.S. recession is likely this year.

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