Federal Reserve Signals Continued Interest Rate Increases Despite Slowing Economic Activity and Inflation

The Federal Reserve is signaling that it will continue to raise interest rates, despite signs of slowing economic activity and inflation.

At a press conference on Wednesday, Federal Reserve Vice Chair Lael Brainard noted that recent reports show high inflation in the United States is easing. She suggested that it was possible that price acceleration may cool without causing significant job losses.

Cleveland Fed President Loretta Mester said in an interview with the Associated Press that she expects the Fed’s policy rate to need to go “a bit higher” than 5%, and stay there for some time to further slow inflation.

Brainard also cautioned that inflation is still high and said the Fed would have to keep interest rates elevated “for some time” to curb price growth.

The Federal Reserve is expected to discuss the policy rate at their upcoming meeting. It is unclear how much the rate will be raised, but it is likely to be at least 5%. The Fed will continue to monitor the economic activity and inflation to determine the appropriate rate.