The US Federal Reserve may need to raise interest rates further if inflation does not show a more consistent decline in the coming weeks, according to a top Fed official.
“Should inflation remain high and the labor market remain tight, additional monetary policy tightening will likely be appropriate,” Fed governor Michelle Bowman told a conference in Frankfurt, Germany, in prepared remarks.
The US central bank has already raised interest rates 10 times in quick succession as it looks to tackle inflation which remains well above its long-term target of two percent.
The Fed’s most recent hike lifted its benchmark lending rate to between 5.0 percent and 5.25 percent, it’s highest level in around 16 years.
Policymakers have said they will take a data-dependent approach to further rate changes.
The labor market, which the Fed is responsible for targeting along with inflation, has so far remained buoyant despite a recent slowdown in economic growth, with the unemployment rate hovering close to record lows.
“In my view, the most recent CPI and employment reports have not provided consistent evidence that inflation is on a downward path,” Bowman said, referring to the consumer price index measure of inflation.
But she added: “I will continue to closely monitor the incoming data as I consider the appropriate stance of monetary policy going into our June meeting.”
Earlier this week, another top Fed official left the door open to a further interest rate hike to combat inflation.
“We haven’t said we’re done raising rates,” New York Fed President John Williams told the Economic Club of New York.
“I think what we’re going to need to do — as we always do — is be data dependent,” he said.
Futures traders see a close-to 90 percent chance that policymakers will hold lending rates at the Fed’s next meeting on June 14, according to data from CME Group.