dancedancerevolutionarcademachine| Balkin adds another member to the camp supporting long-term high interest rates: The Fed needs more time to stabilize its inflation target

On Thursday, local time, Thomas Barkin, president of the Federal Reserve Bank of Richmond, said that forDancedancerevolutionarcademachineTo meet its 2% inflation target, the Fed needs to maintain higher borrowing costs for a longer period of time. He stressed that the rise in service prices is the main reason for the current high inflation.

In an interview with the media, Barkin pointed out that forDancedancerevolutionarcademachineTo bring inflation back to its target, US demand needs to slow moderately. He also mentioned that with the gradual easing of supply chain problems, commodity inflation has shown a significant downward trend.

"I think we need more time to achieve inflation of 2 per cent in a sustainable and steady manner," Mr Balkin said in a speech on Thursday. "there is still uncertainty about price changes in the service sector, which will take time to stabilize. Nevertheless, I firmly believe that we are moving in the right direction. "

The Fed has not adjusted interest rates since its July meeting, and higher-than-expected inflation figures have made it impossible for officials to cut rates from their highs since 2001. Market participants now widely expect the Fed to cut interest rates six times this year, while the current forecast is close to two, which is expected to happen in early 2024.

Data released by the Bureau of Labor Statistics on Wednesday showed that the US core consumer price index (excluding food and energy costs) rose 0% in April from March.Dancedancerevolutionarcademachine.3%, this is the first time in six months that there are signs of cooling. Earlier, three consecutive months of core CPI data exceeded expectations, raising concerns that inflation could be deep-rooted.

Barkin also referred to retail sales figures released on Wednesday, which showed that retail sales growth had stagnated over the past month. This shows that "consumer spending is good, but not overheated," he said, adding that "this is just one of many economic indicators that helps us understand the current intensity of demand."

It is worth mentioning that recently, a number of Fed officials have expressed the view that the Fed will need to keep interest rates unchanged for "quite a long time." these include Minneapolis Fed President Kashkali, Kansas City Federal Reserve Bank President Jeffrey Shcmid and Cleveland Fed Chairman Mestre.

Mr Kashkari said on Wednesday that he expected Fed policymakers to keep interest rates unchanged for "a long time" until they were confident about the underlying direction of inflation.

"in my opinion, the biggest uncertainty is how much downward pressure monetary policy has put on the economy," Mr Kashkali said. This is an unknown number, and we can't be sure-which tells us that we may need to stay here for a while until we figure out the basic trend of inflation before we come to any conclusions. "

Mr Shcmid also said recently that interest rates were likely to remain high "for some time" as policy makers were looking for evidence that price pressures were easing. Mr Shcmid believes current monetary policy is "in the right place" and predicts that inflation will gradually fall back to the 2 per cent target set by the Fed.

Shcmid also mentioned that because the fiscal deficit is likely to persist, interest rates are likely to remain high for some time. He expressed uncertainty about the return of the low interest rate environment, suggesting that current high interest rates may not simply fall back to pre-epidemic levels.

At the same time, Cleveland Fed Chairman Mestre also said it was appropriate for the Fed to keep interest rates unchanged while waiting for evidence of further easing in price pressures. and believes that it is too early to conclude that the Fed's process is stagnant or that inflation will reverse.

Mestre added that she was in no hurry to consider raising interest rates because a rise in short-term interest rates could bring new instability to the financial system.

Mestre said in an interview that there are clear signs that the economic entity is slowing down, which helps to rebalance the economy. This means that long-term indicators of inflation expectations seem to be "fairly well anchored" at levels consistent with the Fed's 2 per cent target.

Thus, Fed officials generally believe that in order to achieve the inflation target and ensure economic stability, it is necessary to maintain high interest rates and consider policy adjustments after being convinced that inflation is effectively under control.

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