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Fed: Time to raise rates in small steps is coming — Lisa Cook

Federal Reserve Governor Lisa Cook who has already said that the US central bank is focused on tackling “too high” inflation, stated that inflation is still too high.

However, he said it might soon be time for the US central bank to step up the throttle in its efforts to reduce high levels of inflation.

Reuters reported his comments:

“Inflation remains too high” and “as a result, the Federal Reserve should continue to focus on bringing inflation down to our 2% target,” Cook said in remarks prepared for a speech to the Economic Club of Detroit.

“Given the tightening already underway, I am aware that monetary policy works with long lags,” he said.

As the Fed approaches an “uncertain” stopping point for its rate hikes, “it would be prudent to move in smaller steps,” he said, adding that “how far we go, and how long we keep rates tight, will depend on the progress observed in reducing inflation.

In her remarks, Cook, one of the most recent Fed governors, said that “we have started to see some improvement in the inflation data,” though she added that “it would be prudent to read too much into a month of relatively supportive data” before decide that the high price pressures that have prompted the Fed to act are abating.

Cook said the current pace of wage gains is above levels consistent with the Fed’s 2% inflation target. He also said US productivity levels are weak but he expects them to improve with time, and that the US manufacturing sector is in good health.

dollar update

The dollar index, DXY, has fallen to 106.29 on the day from a 20-year high of 114.78 on September 28. The dollar is on track for its biggest monthly loss since September 2010 as investors expect the Fed to hit a rate ceiling early next year.

Pending Fed Chairman Jerome Powell’s speech today, the index has retraced the 107 level. Some analysts expect Powell to oppose the idea of ​​a turnaround soon, given the uncertainty of future releases. on employment and inflation.

Source: Fx Street

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