Federal Reserve leaders say rates could be higher for longer Federal Reserve leaders have said that rates could persist higher for longer if inflation fails to improve. The Federal Reserve's staunch footing has been bolstered after a joint meeting of...

Federal Reserve leaders have said that rates could persist higher for longer if inflation fails to improve.

The Federal Reserve's staunch footing has been bolstered after a joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the Board of Governors' offices.

Federal Reserve stoic about rates

As we reported, inflation is at a three-year low, which has given the Federal Reserve pause on hiking any rates. However, the regulator keeps a firm eye on inflation and has been vocal about raising rates if their projections fail to manifest.

The Consumer Price Index (CPI) has also reported Americans' concerns about food and energy costs. 36 million Americans took part in the poll and expressed their worries about the future if the inflation rate were to spike.

Dana M. Peterson, Chief Economist at The Conference Board, said of the dip in inflation, "Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation and more concerned about future business conditions, job availability, and income."

Federal Reserve Chair Jerome Powell said, "We did not expect this to be a smooth road, but these were higher than I think anybody expected."

The minutes of the meeting read:

"Various participants also emphasized the importance of continuing to communicate this message. Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2 percent."

Inflation needs to keep on the path to this magic 2% line for the Fed to ward off any fears of a rate hike. The minutes remained cautious and said domestic data "releases over the intermeeting period pointed to inflation being more persistent than previously expected and to a generally resilient economy. Policy expectations shifted materially in response."

Chairman Powell has remained stoic in his approach and that of the Fed, saying "we'll need to be patient and let restrictive policy do its work."

Image: Ideogram.

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