Fed closing in on end of rate hiking cycle, central bank officials say
By Ann Saphir and Michael S. Derby
(Reuters) -The Federal Reserve will likely need to raise interest rates further to bring down inflation that is still too high, but the end to its current monetary policy tightening cycle is getting close, several U.S. central bank officials said on Monday.
The Fed has raised interest rates by 5 percentage points since March 2022 to bring down the highest U.S. inflation in four decades. Fed policymakers opted last month to forego a rate increase to give themselves time to assess the still-developing effects of the previous hikes in borrowing costs, even as most also penciled in at least two more increases by the end of 2023.
«We're likely to need a couple more rate hikes over the course of this year to really bring inflation» sustainably back to the U.S. central bank's 2% goal, San Francisco Fed President Mary Daly said during an event at the Brookings Institution, giving voice to the most common view among her rate-setting peers at the Fed.
But, Daly added, while the risks of doing too little are still greater than those of overdoing it on rate hikes, the two sides are getting into better balance as the Fed nears «the last part» of its hiking cycle.
Daly said she fully supported June's policy decision, along with a go-slower approach that allows for more «extreme» data-dependence. «We may end up doing less because we need to do less; we may end up doing just that; we could end up doing more. The data will tell us.»
Fed policymakers are widely expected to deliver a rate hike at their meeting later this month, a move that would bring the policy rate to the 5.25%-5.50% range.
What's less clear is whether they will raise rates again at the September meeting, wait until November, or just
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