Five Fed Regional Bank Presidents Back Another Rate Increase After July Meeting

BlockBeats reported Aug. 5 that hawkish sentiment at the Federal Reserve is building. Since the July FOMC meeting, five of the Fed's 12 regional bank presidents have publicly endorsed another rate hike, saying policy is still not restrictive enough and inflation risks have yet to fully fade. Cleveland Fed President Harker said she leaned toward raising rates at the most recent meeting because the current stance is "not restrictive enough." Dallas Fed President Logan argued that even stripping out recent shocks, core inflation is still around 2.5%, a level that supports keeping policy more restrictive. Minneapolis Fed President Kashkari said policymakers should continue tightening gradually while waiting for additional inflation and employment data, warning that a series of "small, consecutive actions" is preferable to being forced into larger moves later if high inflation becomes entrenched. Kansas City Fed President Schmid said strong U.S. demand and investment suggest monetary policy is not sufficiently restrictive and that further tightening is needed to bring inflation back to the 2% target. St. Louis Fed President Musalem also backed rate hikes, saying the recent U.S. Treasury sell-off reflects concerns about the Fed's credibility as ongoing supply shocks broaden price pressures felt by businesses and households. With five of the 12 regional presidents now clearly signaling a preference for higher rates, the policy debate inside the Fed remains divided. Seven Fed governors, along with New York Fed President Williams and Philadelphia Fed President Harker, had previously favored holding rates steady, underscoring the lack of consensus on the next steps for monetary policy.