Multiple Fed Officials Signal Further Rate Hikes Needed as Inflation Stays Stubbornly High

Several Federal Reserve officials on September 24 delivered a consistent hawkish message: inflation remains too elevated and additional interest rate increases are likely on the table. Philadelphia Fed President Anna Paulson said the central bank may need to raise rates again, describing underlying inflation as "stubbornly high" and noting that the balance of risks shifted ahead of the September policy meeting. She said September's hike moved policy into a better inflation-fighting posture and pledged to support whatever action is necessary to return inflation to the Fed's 2% target.

Paulson identified the buildout of artificial intelligence infrastructure as a contributing inflationary pressure, while characterizing the broader economy as resilient and the labor market as stable. Her most sobering assessment: the best that can be said about inflation right now is that it has not gotten worse. She added that September's inflation reports were a direct driver of the rate hike decision.

Cleveland Fed President Beth Hammack reinforced that view, warning that inflation risks are tilted to the upside and that supply shocks represent a notable challenge for Fed policy at this moment. She cautioned that the longer inflation stays elevated amid solid output demand, the harder it becomes to bring it back to target. Richmond Fed President Tom Barkin separately noted that inflation's persistence became clearer over the summer, adding to the chorus of policymakers signaling rates are unlikely to fall soon.