Fed Officials Push for More Rate Hikes Amid Persistent Inflation Concerns

Fed officials are calling for more aggressive action against inflation after this month's interest rate increase. The Boston Federal Reserve Bank President, Susan Collins, said in a LinkedIn post that she sees an increased likelihood of inflation persisting above 2%. She believes monetary policy can focus on bringing down high inflation with a somewhat more restrictive policy rate.

Richmond Fed President Tom Barkin also expressed concerns about inflation risks, saying they outweigh those tied to maximum employment. He noted that the recent rise in prices is not just due to temporary supply-chain factors like energy or tariffs.

The comments from Collins and Barkin are part of a broader trend among Fed officials calling for more tightening since the FOMC meeting on the 15th and 16th. Chicago Fed President Austan Goolsbee suggested that a building boom in artificial intelligence data centers is adding to inflation pressure, potentially requiring further rate hikes.

The Fed raised its benchmark rate by 0.25 percentage point to a range of 3.75% to 4.00%, and policymakers put the median year-end rate at 4.125% in the dot plot of the Summary of Economic Projections. The market is pricing in a 54.2% chance of another rate increase next month, with a probability of an increase by year-end reaching 89.2%.