Kansas City Federal Reserve President Esther George warned today that it is still too early to tell whether the slowdown in inflation in July is the start of a broader trend in prices.
“We still have high inflation. We saw some slowdown in the July numbers, but I think it’s still [πληθωρισμός] broad-based and in that context there is still work to be done,” George said in an interview with CNBC.
The Kansas City Fed is holding its annual financial conference in Jackson Hole, Wyoming, and George is giving a series of interviews just before the conference begins.
The president of the Kansas City Fed did not want to talk about the next increase in US interest rates, whether it will be by 75 basis points or 50 points, noting that by the September meeting the Fed will have more data on inflation and the labor market.
He also said it was not yet clear how high the Fed would need to raise interest rates to bring inflation under control. He estimated that interest rates going above 4% is likely, while even above 5% cannot be ruled out.
The Fed has raised interest rates since March by a total of 225 basis points, taking them to 2.25% from 2.5%.
In a separate interview with Bloomberg, the president of the Kansas City Fed warned that unemployment will rise as the central bank continues to tighten its policy to bring inflation under control.
He also said that for the region under his jurisdiction he does not see many signs of a potential recession, although he noted that the full impact of successive interest rate hikes has yet to be felt in the economy.
Source: Capital
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