Fed's George: Inflation is too high and too broad to dismiss; returning it to fed's 2% goal is 'top priority'
|Reuters reports that Kansas City Federal Reserve Bank President Esther George on Monday said she expects the US central bank to lift its target interest rate to about 2% by August, with further action dependent on how both supply and demand are affecting inflation.
"Fed policymakers have emphasized a commitment to act expeditiously to restore price stability, and I expect that further rate increases could put the federal funds rate in the neighborhood of 2% by August, a significant pace of change in policy settings" George said in remarks prepared for delivery to an agricultural symposium put on by the Kansas City Fed.
"Evidence that inflation is clearly decelerating will inform judgments about further tightening."
."The central bank’s job is to prevent persistent imbalances from feeding into inflation and unmooring inflation expectations," George said.
''The Fed's interest rate hikes can only reduce demand and cannot influence supply factors that are also heavily impacting inflation,'' she said.
"The evolution of its efforts alongside other factors will affect the course of monetary policy, requiring continuous and careful monitoring."
US dollar under pressure
Meanwhile, the European Central Bank is getting attention which is resulting in a bid in the euro, weighing on the US dollar. The dollar index, DXY, fell on Monday while the euro rallied after the European Central Bank indicated a move from negative interest rates.
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