A run of strong economic data and signs that inflation remains stubbornly high could lead the Federal Reserve to raise its benchmark rate higher in the coming months than it has previously forecast, according to a report from the Associated Press.
On Thursday, Christopher Waller, a member of the Fed’s influential Board of Governors, said that if the economy continued to show strength and inflation remained elevated, the central bank would have to lift its key rate above 5.4%. That would be higher than Fed officials had signaled in December, when they projected it would peak at roughly 5.1% this year.
Even if data to be released later this month were to show hiring and inflation cooling again, Waller said, he would still favor raising the Fed’s rate to a range between 5% to 5.5%, up from about 4.6% now. And if the economic figures were to “continue to come in too hot,” he said, the Fed’s key rate “will have to be raised this year even more to ensure that we do not lose the momentum that was in place” before the robust January economic reports.
