Source: Bloomberg

Steve Matthews, Caraina Saraiva, Jonnelle Marte

After the release of CPI data with continuous inflation pressure, Federal Reserve officials emphasized further interest rates to curb the necessity of inflation, but some opinions on when they stopped interest rates.

Two officials said on Tuesday that interest rates may need to rise to higher than expected to ensure that inflation continues to decline.

Thomas Barkin, the president of the Federal Reserve, said in an interview with Bloomberg TV on Tuesday, "If the inflation rate continues to be higher than our target level, maybe we will have to take more action."

Lorie Logan, the president of Dallas Fed, said: "If you need to cope with the changes in economic prospects through continuous interest rate hikes or offset the inappropriate and loose of the currency environment, we must make preparations for interest rate hikes in a longer period of time than expected."" ".

Before they delivered the above speeches, the US Department of Labor announced that the CPI increased by 6.4%year -on -year in January, far higher than the Fed's 2%annual inflation target.

Philadelphia Fed Chief Patrick Harker delivered a speech later that day, he believed that he needed to increase interest rates to 5%or even higher, because the cooling speed of inflation was slow.

"We will have to let the data decide this," Harker said in a speech after lecture at La Salle University."The federal fund interest rate will be higher than 5%. How much is more than 5%? To a large extent, the data we see."

New York Federal Reserve John Williams said on Tuesday afternoon that to allow the inflation rate to reach a 2%target, the economic growth may need to slow down to a lower level, and the labor market needs to be soft.

"I believe that the mechanism of monetary policy will continue to promote the inflation rate at 2%," Williams stated in a speech preparing for an event for the New York Banking Association on Tuesday."We will persist until the work is completed."

Williams added that it is the correct framework for the federal fund interest rate at 5%-5.5%by the end of the year."I do believe that in the case of strong labor market, it is clear that inflation exceeds the possibility of expected in a longer period of time. We may need to increase interest rates to a higher level than inflation."

The rising cost of gasoline and housing has been driven, and the overall CPI increases by 0.5%compared with December. Although it meets the expectations of economists, it is the largest increase in three months.

BARKIN said in an interview with Bloomberg TV Michael McKee that "inflation is moving towards normalization, but the decrease is slow."

Although the above officials are members of the Federal Public Marketing Committee, Logan and Harker have the right to vote this year, Barkin does not.As the Federal Reserve of New York, Williams and seven other directors have permanent voting rights.

Market response

The

S & P 500 index fell, and US Treasury yields soared after the latest inflation data was released.Investors now believe that the chance of raising 25 base points in the Fed in June is close to 50%, and it is expected that the value of 25 base points will be raised in March and May.

In view of the signs of employment data stronger than expected and continuous inflation, people's expectations of interest rates have increased.

Barclays and Monetary Policy Analytics economists are currently expected to adjust their interest rates to 5.25%-5.5%.Barclays economists wrote in the research report, "We believe that the Federal Reserve needs to see the evidence of the substantial slowdown in the labor market in order to believe that the salary growth rate is moving towards the level consistent with the 2%inflation target.It will not appear until the middle of the year. "

Logan said that she believes that the current monetary policy is facing two risks: too little to do it will cause inflation to make a comeback, and too much to do it will cause excessive pain to the labor market, but the "most important" risk is to do too little to do too little.Essence