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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