Inflation Stalls, Putting Pressure on Fed to Raise Rates

The latest Consumer Price Index (CPI) report shows that inflation remains high, putting pressure on the Federal Reserve to raise interest rates. The July CPI reading showed a 0.1% increase in headline inflation for an annualized growth rate of 3.4%. This is despite a slight reprieve in June.

Cleveland Fed President Beth Hammack argued that the Federal Open Market Committee should have hiked rates at its meeting last month and suggested multiple increases might be needed. She was one of three FOMC members to vote against keeping interest rates unchanged, preferring a 25 basis point hike.

Others, including Federal Reserve Governor Lisa Cook, have emphasized the upside risk to inflation in recent public comments. Cook stated that she would act if signs of continued disinflation do not appear soon, as five years of above-target inflation increases the risk of entrenched higher prices and wages.