(Bloomberg) — Several of the world’s top central bankers said Wednesday that resilient economies are keeping inflation too high, and more monetary tightening will be needed.
(Bloomberg) — Several of the world’s top central bankers said Wednesday that resilient economies are keeping inflation too high, and more monetary tightening will be needed.
“Although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough,” Federal Reserve Chair Jerome Powell said at a conference at the Portuguese resort of Sintra.
His comments on inflation were largely echoed by Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde, both of whom said they expect more moves.
An exception was the Bank of Japan’s leader, Kazuo Ueda, who said the central bank hasn’t raised rates because underlying inflation remains low in his country.
Lagarde, responding to a question about pausing rate hikes, said that’s “not what we’re considering at the moment.”
“We know we have ground to cover,” Lagarde said.
Asked whether Fed officials now anticipate they will raise rates every other meeting after skipping a hike this month, Powell said that may or may not happen, and that he wouldn’t rule out consecutive rate hikes.
The Fed chief spoke two weeks after he and his colleagues left interest rates steady after 15 months of increases to allow more time to evaluate how higher borrowing costs and recent banking strains are hitting the economy.
But Powell and most of his colleagues are signaling more tightening will ultimately be needed to rein in an inflation rate running twice as high as the Fed’s 2% target. Median projections released at this month’s meeting showed Fed officials expect their benchmark rate to rise by another half point this year from the current range of 5% to 5.25%.
A flurry of data released Tuesday pointed to a US economy that is exceeding expectations and proving resilient despite the Fed’s tightening campaign. Reports showed that sales of new homes climbed to the fastest pace in over a year, durable goods orders topped estimates and consumer confidence hit the highest level since the start of 2022.
The Fed’s message is in line with the message coming from central bankers in Europe and elsewhere that further rate increases may be needed if underlying inflationary pressures persist.
–With assistance from Christopher Anstey, Jana Randow, Alexander Weber, Andrew Langley, Andrew Atkinson and Ana Monteiro.
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