The Federal Reserve will need to raise rates to higher levels than previously anticipated to prevent inflation from picking up if the recent strength in hiring and consumer spending continues, a central bank official said Thursday. “I would be very pleased if the data we receive on inflation and the labor market this month show signs of moderation,” Fed governor Christopher Waller said in remarks posted on the Fed’s website. “But wishful thinking is not a substitute for hard evidence in the form of economic data. After seeing promising signs of progress, we cannot risk a revival of inflation.” Mr. Waller didn’t say in his prepared remarks whether he would continue to favor raising interest rates by a quarter-percentage point, which was his preference at the Fed’s last meeting, or whether he would instead support a larger half-point increase at its next gathering, March 21-22. The Fed’s rate-setting committee voted unanimously last month to slow rate increases by lifting their benchmark federal-funds rate by a quarter percentage point—to a range between 4.5% and 4.75%—following larger moves of a half point in December and 0.75 point in November. At their December meeting, most Fed officials projected lifting the rate to between 5% and 5.5% this year to combat high inflation by slowing economic activity.
Source: WSJ.com: US Business
