Fed Begins to Split on the Need for Speed to Peak Rates
Federal Reserve officials are starting to stake out different views on how fast to raise interest rates as they balance hot inflation against rising stress in financial markets.
With Fed target range now at 3% to 3.25% and only a few moves from reaching their forecast peak, officials are starting to speak differently about the urgency with which they need to get there.
Hawks like Cleveland Fed chief Loretta Mester say they must keep raising rates aggressively to win the battle against inflation even if that causes a recession. Vice Chair Lael Brainard has offered a slightly softer assessment while continuing to stress the need to tighten policy.
Brainard’s speech Friday -- the first from Fed board leadership since officials met last week -- said policy will need be restrictive for some time and avoid the risk of prematurely pulling back.
But she injected a note of caution about how fast they need to go, while discussing a number of ways in which the global rate-hiking cycle could spill over on the US economy.
Her San Francisco colleague Mary Daly also highlighted the cost of doing too much -- as well as too little -- to cool prices.
Their comments injected a slight variation into what has been a uniformed stream of insistence from regional Fed presidents declaring unflinching resolve to crush inflation.