In Final Comments Before Quiet Period, Federal Reserve Speakers Contemplate Increased Inflation

♏ ꦡFederal Reserve officials continued to paint a murky picture of its next steps Friday as they faced questions about what could happen if inflation kept moving higher.

Minneapolis Federal Reserve Bank President Neel Kashkari said it was possible rate cuts could be pushed into 2025, while Atlanta Federal Reserve Bank President Raphael Bostic prioritized an interest rate hike over allowing inflation to settle at a rate higher than 2%.

Inflation has ticked higher𒁏 in 2024 after dropping rapidly last year, and in recent days Fed officials have been speaking about what happens if progress on inflation stalls. 

In an interview on Fox News Thursday evening, Kashkari said he had forecast two rate cuts for 2024 in March, but when asked whether he stuck to that forecast, he declined to answer. He said he would review incoming data before the Fed's next meeting at the end of the month.

When asked if rate cuts could be pushed to 2025 if economicꦅ data remains strong and prices elevated, Kashkari said, “Potentially.”

In an appearance at the University of Miami the same day, Bostic kept to his forecast of🎃 just one interest rate🐼 cut this year. But when pressed on whether int🍰erest rates could be raised if inflation remains above the target, Bo🐈stic said the higher priority for the Fed was driving inflation down, even if it means rate hikes.  

“If inflation stalls out, or moves away from the target, I don’t think we’ll have any option but to respond to that,” Bostic said. “I’d have to be opꦰen to increasing rates.”

In an interview session at the Society for Advancing Business Editing and Writing Friday, Chicago Federal Reserve Bank President Austan Goolsbee said he didn’t want to speculate on the conditions that could prompt the central bank to raise rates. However, like Bostic, he emphasized the pr♔iority of returning inflation to the tar♑get rate. 

“We’re going to get inflation back to 2%. We will do that,” Goolsbee said. “Now we just have to figꦉure out what is necessary, how restrictive we need to be.”

These will likely be the last significant remarks before the Federal Reserve officials move into their "blackout period" ahead of their next meeting. The period starts Saturday and officials are not allowed to speak on matters of monetary policy until after their meeting.

Officials will get a couple more major economic indicators before their April 30 meeting next week. The first quarter measure of Gross Domestic Product will be released Thursday followed by the Personal Consumption Expenditures (PCE) inflation index on Friday. The Fed isn’t expected to adjust rates at the meeting, but their deliberations and messa🐟ging could give insight into their next steps.

Follo෴wing the blackout period, Federal Reserve officials will next be able to make comments on Friday, May 3, following the release of their decision on Wednes🥀day. 

-Terry Lane