Lates News

Federal Reserve's Musalem said on Monday that the Fed may need to raise interest rates further to lower inflation, as demand remains strong and commodity price shocks have extended beyond the oil sector. He also stressed that the Fed would be better off acting sooner rather than waiting. Musalem said: "Persistent demand and recurring supply pressures are still exacerbating inflation risks. I believe that without further policy measures to curb inflation, inflation is likely to be significantly above our 2% target 18 months from now, rather than reaching the target level. I think policy must impose meaningful restraint on inflation. That way the Fed can achieve its inflation target in about a year and a half, allowing time for tightening policy to affect the economy." He also said: "An earlier, gradual policy tightening is more appropriate and less disruptive to the economy than larger and potentially more abrupt policy moves later in the future." Musalem pointed out that inflation "is not a risk; it is already here." Even after stripping out the effects of oil and other supply-related factors, underlying inflation could still be several percentage points above the Fed's target and "is moving in the wrong direction."