Fed Officials Warn Inflation May Require Tighter Policy

Several Federal Reserve officials warned that inflation remains persistently above the 2% target and that monetary policy may need to become more restrictive. Chicago Fed President Austan Goolsbee said recent producer and consumer price data show inflation moving in the wrong direction and that the Fed has work to do to restore its credibility; New York Fed President John Williams described inflation as persistent amid a strong economy and strengthening labor market. Cleveland Fed President Beth Hammack called for restrictive policy and favored smaller, more frequent rate increases, while Kansas City Fed President Jeffrey Schmid said rates remain accommodative and inflation pressures extend beyond energy. Markets were pricing in a quarter-point increase at the Fed’s December meeting, with officials saying incoming data would shape the decision.