Three Fed officials said interest rates need to be raised to combat inflation

Federal Reserve officials who spoke out at the regulator’s latest meeting against keeping the benchmark interest rate at its current level stated that it needs to be raised to curb inflation, according to CNBC. Following its July 28–29 meeting, the U.S. central bank left the interest rate unchanged at 3.5–3.75%. Three presidents of regional Federal Reserve Banks—Neil Kashkari of Minneapolis, Beth Hammack of Cleveland, and Lori Logan of Dallas—all of whom advocated for a 0.25 percentage point rate hike.

"In my view, the time has now come for [the Federal Open Market Committee (FOMC)] to act to accelerate the return of the Personal Consumption Expenditures (PCE) price index to our 2% target and fulfill our commitment to ensuring price stability for Americans,” Beth Hammack said on her LinkedIn page. “The longer high inflation persists, the more difficult and costly it may be to bring it down,” she added. The core PCE index—a key inflation indicator for the Fed that excludes food and energy prices— rose 3.3% year-over-year in June.

“Inflation has stubbornly remained above 2% for more than five years now, and I’m not sure it will return to our target on its own,” Hammack emphasized.

Kashkari agreed with her: small rate hikes now could prevent the need for more aggressive action by the Fed in the future, he said in a separate statement released by his regional bank.

Laurie Logan—the third official to support the interest rate hike—also stated that she believes the Fed’s current monetary policy is incapable of exerting any downward pressure on inflation. “Without any policy restraint [from the regulator], inflation will likely continue to remain above the target level until an unforeseen shock occurs,” Logan noted.

Inflation has remained above the Fed’s 2% target for more than five years. In 2026, it accelerated amid the war between the U.S. and Iran and the fallout from U.S. President Donald Trump’s import tariffs. Although price growth slowed in June following a brief easing of tensions in the Middle East, energy prices have risen again, sparking concerns that the Fed will have to tighten policy, according to CNBC.

Although the regulator’s chairman, Kevin Warsh, voted to keep rates unchanged, he stated during a press conference following the meeting that he remains determined to bring inflation back to the 2% target, the TV channel reports. “We have turned a new page and understand that inflation, which has remained above target for more than five years, cannot be cured in nine weeks or with a single month of moderate price declines,” he said.

Yields on long-term U.S. Treasury bonds surged to 2007 highs following the Fed’s decision. The U.S. dollar is also heading for its worst week in the past three months amid concerns that the Fed will not act decisively enough to curb inflation.

This article was AI-translated and verified by a human editor