Fed Officials Signal More Rate Hikes Ahead as Inflation Remains Elevated

US Federal Reserve officials are signaling that interest rates will likely rise again to combat high inflation. The central bank's priority is to return inflation to its target rate of 2% and policymakers are weighing risks to the labor market in making decisions.

Philadelphia Fed President Anna Paulson described inflation as 'stubbornly elevated' and said that if conditions evolve as she expects, some modest further tightening may be warranted. Speaking in London, New York Fed President John Williams also suggested tighter monetary policy is coming, citing projections that pencil in a rate increase by the end of the year.

Williams noted that it's likely another rate hike will be appropriate by the end of 2026, which seems like a reasonable way to think about it. The current benchmark interest rate is between 3.75% and 4%, after the Fed raised rates by a quarter of a percentage point last week.