Fed Sees Further Interest Rate Hikes Needed to Combat Persistent Inflation

Federal Reserve Governor Michael Barr said interest rate hikes are 'likely' needed to combat inflation after the central bank raised rates for the first time in three-plus years. The decision to raise the benchmark interest rate by a quarter point was seen as necessary due to inflation being above the Fed's 2 percent target, according to Barr.

The Fed governor added that further policy adjustments are likely needed to bring down inflation to target levels in a timely manner. Annual inflation has remained above 2 percent since March 2021 and was 3.4 percent last month.

Traders are pricing in a nearly 70 percent chance the FOMC will hike interest rates by a quarter point at its next meeting in late October, according to the CME Group's FedWatch tool.