Constituent policy

Fed aims to ‘significantly decelerate’ inflation by tightening policy, Kansas City Fed Chairman says

As the Federal Reserve’s annual Jackson Hole symposium kicks off Thursday in Wyoming, Federal Bank of Kansas City President Esther George spoke to Edward Lawrence of FOX Business to say she expects hikes in rate until the end of the year.

“We need to see the fed funds rate get to a point where inflation starts to decelerate significantly because we can’t really know what the point at which a resting point will be,” George said in an interview that aired on “Mornings with Maria.”

On Friday, Fed Chairman Jerome Powell will deliver a speech that could signal how much or how quickly the central bank could raise interest rates in the months ahead. Powell’s remarks will be scrutinized by traders and economists on Wall Street and could potentially cause wild swings in financial markets.

Before Friday’s big announcement, George, along with Powell and the Fed board, are expected to meet and make the decision on the real policy rate.

US ECONOMY HEADING TOWARDS RECESSION BY MID-2023, MAJORITY ECONOMISTS SAY

“I haven’t decided, 50 or 75. And for me, that hasn’t been the biggest question in terms of thinking, really, along the way,” George explained. “The path is what I think is going to be important for the public to understand that we are in [sic] a process of policy tightening to bring inflation down, to get those imbalances that we see in the economy today into a better place.”

Esther George, president and CEO of the Federal Reserve Bank of Kansas City, discusses “tightening policy” with Edward Lawrence of FOX Business on “Mornings with Maria” Thursday, August 25, 2022. (Getty Images)

George noted that “huge” government fiscal support, aggressive Fed policy and supply chain issues coupled with a surge in consumer demand have led to the current state of the economy.

“That’s the imbalance I’m focusing on, which is when do you start to see that demand cool off? Because of course we can’t fix the supply chain issues, but we can affect demand,” Kansas City said. underlined the chairman of the Fed. “And that’s really where I think we need to focus right now is bringing that into line.”

GET FOX BUSINESS ON THE ROAD BY CLICKING HERE

George admitted that government spending is one element that works against the Fed’s goal of lowering inflation, and that the economy has yet to see a spike in inflation.

“Tax expenditures are going to be a component of how we think about the broader economy,” George said. “Again, there are many factors that we are seeing today that are driving the imbalance that we are seeing in the economy.”

LEARN MORE ABOUT FOX BUSINESS

Ken Martin of FOX Business contributed to this report.