Three US Federal Reserve officials said the central bank should keep borrowing costs high for longer as policymakers await more evidence inflation is easing, suggesting they’re not in a rush to cut interest rates.
Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin, speaking separately on Thursday (Friday AEST), argued it may take longer for inflation to reach their 2 per cent target.
“Incoming economic information indicates that it will take longer to gain that confidence,” Mester said on Thursday during an event in Wooster, Ohio. “Holding our restrictive stance for longer is prudent at this point as we gain clarity about the path of inflation.”
The Cleveland Fed chief said she expected price growth to cool at a slower pace than last year, now that there is less downward pressure from improving supply chains.
Mester, who votes on policy decisions this year, is stepping down at the end of June when her term expires. She said policy was well positioned, and it was too soon to say progress on inflation had stalled, reiterating comments she made earlier this week.
Williams made similar comments in a Reuters interview published on Thursday, saying he doesn’t see a reason for adjusting monetary policy now. And Barkin, speaking on Thursday with CNBC, said demand needed to cool further to get price growth to the Fed’s goal, noting goods inflation has come down significantly as supply chains have healed.
