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[BUSINESS] · United States · 23 sources

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Federal Reserve officials signal potential for further interest rate hikes

Several Federal Reserve officials have signaled that further interest rate increases may be necessary to return inflation to the 2% target. St. Louis Fed President Alberto Musalem characterized the current 3.75% to 4.00% interest rate range as being on the "accommodative side," suggesting that current policy may not yet be restrictive enough to curb inflation driven by strong demand and recurring supply shocks, such as rising commodity prices and energy costs.

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, warned that the central bank faces a difficult trade-off. He noted that persistent supply shocks—including tariffs and higher oil prices—are becoming a regular feature of the economy. Goolsbee stated that forcing inflation back to target in the short term may cause economic pain by pushing employment below target levels.

Minneapolis Fed President Neel Kashkari also emphasized that inflation remains too high across all sectors of the U.S. economy, including services, rather than being limited to volatile sectors like energy and food. Additionally, Goolsbee identified massive capital flows into artificial intelligence (AI) infrastructure as a potential demand-side driver that could complicate the inflation outlook by keeping demand elevated.

Entities

Alberto Musalem · Austan Goolsbee · Federal Open Market Committee · Federal Reserve · Federal Reserve Bank of Chicago · Federal Reserve Bank of Minneapolis · Neel Kashkari

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