Fed dissenter says 75 bp rate hike creates uncertainty

By Ovunc Kutlu

ANKARA (AA) – The US Federal Reserve's 75 basis points of rate hike earlier this week creates uncertainty for the central bank's monetary policy, Kansas City Fed President Esther George said on Friday.

"I dissented at this week's FOMC meeting against a 75 basis point increase in the target range for the federal funds rate because I viewed that move as adding to policy uncertainty simultaneous with the start of balance sheet runoff," George said in a statement.

"With high inflation and a tight economy, the case for continuing to remove policy accommodation is clear-cut," she added.

George was the only Federal Open Market Committee (FOMC) member who voted for a 50 basis point of rate hike on Wednesday when the Fed made its steepest interest rate increase in 28 years in order to lower record high inflation.

She said inflation started building over the past year and has shown no meaningful signs of deceleration since then.

However, she emphasized that the central bank's speed to adjust its monetary policy rate is important.

"Policy changes affect the economy with a lag, and significant and abrupt changes can be unsettling to households and small businesses as they make necessary adjustment," she explained.

US consumer inflation rose to 8.6% in May, from the same month of last year, recording its highest annual increase in more than 40 years.