Federal Reserve and European Central Bank officials have warned that the fight against inflation has some way to go, and further tightening is required.
A growing chorus of central bank officials have reinforced that interest rates need to keep rising in order to crush inflation, in a sign that policymakers are escalating their fight against dovish bond markets.
live event in New York. “We’re going to need to maintain that for a few years to make sure we get inflation to 2 per cent.”That was message was echoed by governor Christopher Waller who warned that interest rates may be higher for longer than some are currently expected: “It might be a long fight,” Mr Waller said.
Their hawkish rhetoric followed remarks by Mr Powell earlier this week which received a mixed reception by markets; while hawkish traders highlighted the message that interest rates need to keep rising, doves emphasised comments that inflation has turned a corner. The Reserve Bank surprised markets with a similarly hawkish tone this week as governor Philip Lowe warned of more rate rises in the months after Australia’s fourth quarter CPI to a near 33-year high of 7.8 per cent., compared to expectations of 3.6 per cent heading into this week’s meeting.European Central Bank officials sounded a similarly hawkish warning, with Governing Council member Klaas Knot suggesting that another rate rise in March is unlikely to mark the end of its tightening cycle.
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