Central Bank Official Calls For Rate Hike Above 5% To Stamp Out Inflation

The United States Federal Reserve’s hawkish stance has been apparent as policymakers continue increasing interest rates monthly. Despite being in the midst of a banking crisis, the Fed still raised the rate by 25 basis points last month, bringing the policy benchmark to a target range of 4.75% to 5%.

This move has prompted a central bank official to call for a rate hike. Federal Reserve Bank of Cleveland President Loretta Mester believes policymakers should push the benchmark rate above 5% this year and hold it there for a while to stamp out inflation.

The Federal Reserve has been keeping a close eye on the inflation rate due to its significant impact. Mester predicts that there will be significant improvements in the inflation front soon. In recent months, inflation in the U.S. has been on a gradual decline, with the CPI falling below-expected numbers. Specifically, it dropped to 7.1% in November last year, followed by a decrease to 6.5% in December, 6.4% in January, and 6% in February of this year.

The Fed’s hawkish stance may raise concerns among investors and borrowers alike. However, Mester’s expectation of meaningful refinement on inflation could provide relief to those who are worried about the potential impact of the Fed’s decision. As the Fed continues to monitor inflation and adjust interest rates accordingly closely, it remains to be seen how this will impact the U.S. economy in the coming months.

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