Fed Policymakers Urge Rate Hikes Amid Mounting Inflation Risks

Three US Federal Reserve policymakers dissented from the central bank's decision to keep interest rates steady, urging rate hikes to avoid entrenched inflation. The Fed held rates at 3.50-3.75 per cent for its fifth straight meeting on Wednesday. Beth Hammack, president of the Cleveland Fed, said 'inflation has been too high for too long' and that the longer it persists, the more challenging it is to bring down.

Neeal Kashkari, president of the Minneapolis Fed, also dissented, saying that a series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary. Lorie Logan, president of the Dallas Fed, agreed with the need for 'modest action' now to reduce the need for potentially sharper hikes later.

The dissenting votes are unusual and illustrative of the challenge the Fed faces in bringing inflation back down to its 2 per cent target. US households have been battered by high prices, and inflation spiked to three-year highs on the back of President Donald Trump's war on Iran since March, with skyrocketing energy prices bleeding through into other products.