Esther George, president of the Kansas City Federal Reserve, is urging her colleagues to remain aggressive in their efforts to deal with runaway inflation as she nears the end of her 40-year central banking career. She stated on Thursday that the Fed should raise its benchmark borrowing rate to above 5% and maintain it there until substantial evidence that prices are stabilizing. “Holding that until we get evidence that inflation is actually coming down is really the message we’re trying to put out there,” she told CNBC’s Steve Liesman during a “Squawk Box” interview. “I’ll be over 5%, and I see staying there for some time, again, until we get the signal that inflation is really convincingly starting to fall back toward our 2% goal.”
At the December Fed meeting, the rate-setting Federal Open Market Committee voted to raise the fed funds rate half a percentage point to a range of 4.25%-4.5%. Minutes of the meeting released on Wednesday indicated no prospect of any rate cuts in 2023. Members expressed concern that the public might mistakenly perceive a reduction in rate hikes as a softening of the policy after a string of four straight three-quarter point hikes. Asked whether her view is that the fund’s rate should hold above 5% into 2024, George replied, “It is for me.” That statement comes a day after Minneapolis Fed President Neel Kashkari wrote that he thinks the funds’ rate should rise to 5.4% and could go even higher if inflation doesn’t come down.
