'After the unacceptably rapid price increases of the past several years, I’m not yet convinced that we’ve extinguished excess inflation.' The Fed has raised its policy rate a total of 5.25 percent points since March 2022 in a battle against inflation that at its peak last year hit 7% by the Fed's preferred measure, the personal consumption expenditures price index.
The opening dinner of the Kansas City Fed's annual economic symposium in Jackson Hole
"Forecasts are inherently uncertain. My base case, though, is that there is work left to do," she said in remarks prepared for delivery to the Dallas Business Club at Southern Methodist University. "After the unacceptably rapid price increases of the past several years, I’m not yet convinced that we’ve extinguished excess inflation."
Inflation has since slowed, to 3.3% in July, and the Fed has dialed down the pace of its rate hikes as well, even skipping a rate increase at its June meeting before delivering its most recent quarter-point hike in July, bringing the target range for the policy rate to 5.25%-5.5%. Lower inflation is "encouraging" but it isn't necessarily low enough, she said, especially with labor markets still strong -- unemployment is 3.8% and there are still 1.5 jobs for every job seeker.
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