WASHINGTON — A run of strong economic data and signs that inflation remains stubbornly high could lead the Federal Reserve to raise its benchmark rate higher in the coming months than it has previously forecast, several Fed officials say in a report by the Associated Press.
On Thursday (March 2), Christopher Waller, a member of the Fed’s influential Board of Governors, said that if the economy continued to show strength and inflation remained elevated, the central bank would have to lift its key rate above 5.4%. That would be higher than Fed officials had signaled in December, when they projected it would peak at roughly 5.1% this year.
“Recent data suggest that consumer spending isn’t slowing that much, that the labor market continues to run unsustainably hot and that inflation is not coming down as fast as I had thought,” Waller said in prepared remarks for a business conference in Los Angeles.
His suggestion was in contrast to a speech he gave in January, titled “A Case for Cautious Optimism,” that captured a prevailing sentiment at the time that inflation had peaked and was steadily declining.
Read the full report by the Associated Press.