Faster rate hikes possible in September if inflation fails to cool: Fed official

By Ovunc Kutlu

ANKARA (AA) – Cleveland Federal Reserve Bank President Lorreta Mester said Thursday that faster rate hikes are possible in September if inflation fails to cool by that time.

"If by the September FOMC meeting, the monthly readings on inflation provide compelling evidence that inflation is moving down, then the pace of rate increases could slow, but if inflation has failed to moderate, then a faster pace of rate increases could be necessary," she said at the Philadelphia Council for Business Economics.

Noting that the Federal Open Market Committee (FOMC) raised its policy rate by 25 basis points in March and by another 50 basis points in May, Mester said "the Committee indicated that it believes ongoing rate increases will be appropriate."

"The key challenge facing the economy is unacceptably high inflation, which reflects the imbalance between strong aggregate demand and constrained aggregate supply. The FOMC is committed to using its tools to get inflation under control," she said.

Mester said Russia's war on Ukraine and the coronavirus lockdowns in China continue to pose upside risks to inflation and downside risks to economic growth.

Several Fed officials recently indicated they support rate hikes of 50 basis points in each of the bank's meetings that will conclude June 15 and July 27.

The central bank will also hold a two-day meeting on Sept. 20 - 21.

Mester has 2022 voting rights on the FOMC.