Interest rates can remain high for some time reflecting economic conditions. Tightness in labor market does not support the idea of a current recession. Future interest rates will be data dependent.
President of the San Francisco Federal Reserve and currently not a voting member, made her thoughts clear and commented that a lot of work must be done before the Fed can get inflation under control.
On the August 2nd edition of “Fortt Knox,” and one week after the FED raised rates for the second consecutive time by 75 bp bringing the fed funds rate range to 2.25%-2.50%, the San Francisco Fed President said no one should see the aggressive move as an indication that the FOMC is winding down. During the interview with host Jon Fortt, she reminded the audience of the Fed’s dual mandate which is maximum employment and price stability.In terms of growth and inflation, she acknowledged a noticeable drop in gas prices , a slowdown in the housing market, a downshifting in the broader economy but added that inflationary pressures remain high. Recent interest rate hikes have been a good start to curb such burden, but a level of 9.1% of CPI in June is not considered price stability.
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