Solid Gold Berjangka – Several Federal Reserve officials have reiterated the need for a persistently tight monetary policy following US inflation data for October, which came in higher than expected. The Consumer Price Index (CPI) rose by 0.4% on a monthly basis—surpassing the 0.3% projection—while the core CPI increased by 0.3%, exceeding the 0.2% forecast.
Fed Governor Christopher Waller was among the most assertive in calling for further tightening. He previously indicated that a 25-basis-point interest rate hike in December remains appropriate, while also leaving the door open for a 50-basis-point increase should the core CPI reach 0.3% or higher.
Dallas Fed President Lorie Logan also argued that monetary policy requires further tightening, as inflation remains above the 2% target and the labor market stays robust. Logan estimates that an additional cumulative increase of at least 50 basis points will be necessary before the Fed re-evaluates its policy trajectory.
Conversely, Philadelphia Fed President Anna Paulson advocates for a more gradual approach. While she agrees that interest rate hikes remain necessary, she emphasizes that the pace should account for the economy's capacity to adjust to tighter financial conditions.
Fed Governor Michelle Bowman highlighted that inflationary pressures are broadening across various sectors. She noted that price increases have persisted longer than anticipated, though she cautioned that any further tightening must also weigh the risk of an economic slowdown.
These comments reinforce expectations that the Fed may still raise interest rates in December. However, the magnitude of any such hike remains uncertain and will depend heavily on incoming data regarding inflation, the labor market, and overall US economic conditions in the coming weeks. (srh)