Inflation-fighting Fed isn't focused on impact of rates on stocks, Esther George Says
Kansas City Federal Reserve President Esther George said Thursday that higher interest rates are needed now to bring down inflation and policymakers are not focused on the impact that is having on the stock market.
In a CNBC interview, the central bank official noted that the Fed is looking to tighten financial conditions, of which equity markets are a component, in an effort to tamp down price increases running around their fastest pace in more than 40 years.
«I think what we're looking for is the transmission of our policy through market's understanding, and that tightening should be expected,» George told CNBC's Steve Liesman during a "Squawk Box" interview. «So it's not aimed at the equity markets in particular, but I think it is one of the avenues through which tighter financial conditions will emerge.»
The S&P 500 is teetering on the brink of a bear market, or a 20% plunge from its high. Investors have grown nervous over both rising prices and the impact that a big jump in interest rates could have on corporate earnings and consumer behavior.
Earlier this month, the Fed approved a 50-basis-point rate hike and has indicated similar-sized increases are likely at its next few meetings.
George said «we need higher interest rates» but she's comfortable with the pace the Fed is moving at now and doesn't see the need for bigger moves, such as a 75-basis-point increase that some have suggested.
«Moving deliberately, making sure we stay on course to get some of those rate increases into the economy and then watch how that's unfolding is going to be really the focus of my attention,» she said. «I think we're good at 50 basis points right now, and I'd have to see something very different to say we need to go further than
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