The Fed toughens its speech to try to contain inflation in the US

In previously prepared remarks, he said that changes in US credit conditions since the Silicon Valley Bank collapsed in early March are “in line” with the financial tightening already underway with rate hikes, comments that they downplayed the idea that a worse-than-expected credit crunch might make further increases less necessary.

“It is not yet clear that the recent tensions in the banking sector have materially intensified the tightening of lending conditions,” beyond what the Fed was trying to do anyway through its rate policy, Waller said.

The US economy “continues to move apace for the most part,” he said, with the underlying pace of price increases “moving sideways.”

Recent declines in headline inflation have been largely driven by food and energy prices, volatile commodities whose swings can mask underlying inflationary trends.

Excluding these goods, the personal consumption expenditures price index in April increased at an annual rate of 4.7%, more than double the central bank’s target.

In separate remarks at a financial policymakers’ forum in Maryland, Richmond Fed President Thomas Barkin said he was “comfortable” with further rate hikes as inflation is not yet on an obvious path back to normal. 2%.

Demand in the United States was weakening a bit, he said, but “I have not yet been convinced of the plausible story that slowing demand returns inflation relatively quickly” to the 2% target, Barkin said. “If future data doesn’t support that story, I feel comfortable doing more.”

The Fed ended its streak of 10 consecutive borrowing cost hikes this week when it decided to keep the overnight benchmark rate in the 5%-5.25% range. However, they also released new projections showing that 12 of 18 Fed officials see rates rising at least another half point by the end of the year.

Although Fed Chairman Jerome Powell said no decision had been made on the upcoming July meeting, investors and other analysts generally expect the central bank to resume rate hikes.

Neither Waller nor Barkin commented directly on their monetary policy preferences for the July meeting.