Inflation remains a "thorn in the eye"! Federal Reserve officials intensively hawkish: Be prepared for interest rate hikes.

More and more Federal Reserve officials are signaling a hawkish stance, indicating that if inflation fails to cool down, raising interest rates may soon be on the agenda. Kansas Fed President Shicmit said on Friday that he remains concerned about high inflation and pointed out that Fed officials should clearly indicate their willingness to take necessary measures to achieve price stability. "Inflation rates have been above the Fed's 2% price stability target for more than five years, so now is not the time to relax vigilance," Shicmit said in the speech prepared for a conference in Reykjavik, Iceland. "We must continue to demonstrate our commitment to price stability and our willingness to take necessary action to fulfill our mission." With renewed inflation pressures sparked by the US-Iran war, pushing up fuel and other commodity costs and denting consumer confidence, Fed officials are increasingly focused on inflation. More policymakers are indicating that the Fed should signal a possibility of raising interest rates in the next rate action, rather than cutting rates. Shicmit said that the US labor market is currently balanced due to slowing immigration and an increasing retirement population. He said, "The fewer workers, the fewer jobs needed, which explains both the slow pace of employment growth and the relatively low and stable unemployment rate." Shicmit said earlier this month that inflation is the "most urgent" risk facing the economy. Data released on Thursday showed that the Fed's favored inflation measure rose 3.8% year-on-year in April, the highest level since 2023. Shicmit reiterated on Friday, "The issue I am most concerned about is inflation, which is currently too high and has been persistently above the target level for too long." St. Louis Fed President Musalem is also concerned about inflation. He said on Thursday, "If we do not see a cooling of inflation in the next one or two quarters, I will be very concerned." He also said that policymakers cannot rely on the productivity boom that artificial intelligence may bring to alleviate the current inflation problem, warning that future rate hikes cannot be ruled out. Musalem emphasized, "Our task is to maintain price stability and maximize employment, and currently the inflation rate is still above target. Therefore, the possibility or probability of raising interest rates in the futureI think it must be greater than zero." It is worth noting that the influential number three at the Fed, New York Fed President Williams, also said on Thursday that the current policy stance is appropriate, but if inflation remains high, rate hikes will be inevitable. The Fed will hold its next policy meeting on June 17-18, the first under new Chairman Kevin Wash's leadership. Wash previously stated that artificial intelligence is expected to boost productivity and bring about deflation effects, making it easier for policymakers to cut rates, aligning with President Trump's core demands when nominating him. However, with growing hawkish voices within the Fed, Wash faces a dilemma in policy decisions. Federal fund rate futures pricing shows that the market believes the Fed will not cut rates this year, with the probability of rate hikes approaching 50%.