Fed dissenters push for rate hikes to combat inflation

Three Federal Reserve officials who voted against the decision to keep the policy rate unchanged said they support raising rates now to curb inflation. Cleveland Fed President Beth Hammack said, "In my view, now is the time for the Federal Open Market Committee to act to speed the return of PCE inflation to our 2 percent objective and deliver on our commitment to price stability for the American people." She added that prolonged high inflation makes it more costly to bring prices down. Minneapolis Fed President Neel Kashkari argued that a series of modest policy moves would be preferable to waiting and later needing bolder action. > "In my view, a potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary." Both officials joined Dallas Fed President Lorie Logan in dissenting from the nine other voting members who voted to keep the overnight borrowing rate in the 3.5%-3.75% range. Fed Chair Kevin Warsh, who voted for the hold, said the Fed remains committed to returning inflation to its 2% target, noting that the problem cannot be solved quickly. Hammack expressed doubt that inflation will fall back to target on its own, citing both supply-side factors such as energy prices and demand-side pressures. Kashkari warned that successive supply shocks could embed higher inflation and that monetary policy still has a role in addressing these challenges. Logan is expected to issue a statement explaining her vote later Friday.