Fed officials weigh in on further rate hikes to combat inflation

Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss Fed officials Susan Collins and Charles Evan’s takes on inflation.

Video transcript

JULIE HYMAN: And, as Soz mentioned, we're continuing to hear from a slew of Fed speakers this week after Fed presidents Charles Evans, Susan Collins, Raphael Bostic, Loretta Mester, they already spoke, signaling the Fed will continue to prioritize pushing back against inflation. We also heard from Jay Powell, specifically with regard to crypto. Yahoo Finance's Jen Schonberger has her hands full covering all of that commentary. What stands out, Jen?

JENNIFER SCHONBERGER: Good morning, Julie. That's right. After that blackout period ended and the Fed hiked rates last week, Fed officials are out in droves, speaking over the past 48 hours, underscoring their resolve to fight inflation. We heard from Chicago Fed President Charles Evans this morning.

He says the Fed needs to raise interest rates by at least another percentage point this year, a more aggressive stance than previously embraced. Evans also said he does not see, quote, "recession-like" unemployment rate numbers ahead, even as the Fed sees the unemployment rate rising to 4.4% next year, a jump from current levels that some economists say could usher in a recession.

Now, we also heard from Cleveland Fed President Loretta Mester, who says that the Fed should raise rates higher and keep policy restrictive for some time since inflation is, quote, "unacceptably high." She underscored it's better that the Fed err on the side of doing more rather than doing less, even if that means a policy error, i.e. potentially a recession.

We also heard from Susan Collins, the new president of the Federal Reserve Bank of Boston, in her first comments since taking that post. She says that she's committed to bringing inflation down to 2% and supporting higher interest rates that we saw the FOMC put forth last week. She also says that that's fine, even if that means that the economy slows.

Now, elsewhere, as you mentioned, we heard from Fed Chair Powell this morning, who was participating virtually in a conference put on by the Bank of France on regulating crypto. Powell said there's a real need for regulation as DeFi expands, and he says, while some crypto resembles traditional financial banking activities and could be regulated using traditional banking regulations, other aspects are more novel.

And he pointed specifically to replacing intermediaries with smart contracts and that that would require perhaps different sorts of regulation. Now, the Fed Chair also weighing in again on a CBDC. He reiterated that no decision has been made and there probably won't be a decision for some time.

He said it's going to take a couple of years, actually, before the Fed can solidify its analysis and conclusion. Guys.

BRAD SMITH: And, Jen, while we have you, later on today-- actually, just after the trading session kicks off-- we're going to be set to hear from the St. Louis Fed President James Bullard. What signal could he strike different from what we've already heard from other Fed presidents, and especially as Bullard has been known to be more hawkish, more aggressive over the past rate decisions, as well?

JENNIFER SCHONBERGER: Yeah. I mean, it was a unanimous decision as far as the 75 basis point rate hike last week, but I do expect him to come out quite hawkish. The latest numbers we've seen on inflation, particularly that CPI number, was quite hot, and so it seems that the Fed still needs to do a lot of work here.

So I would expect him to be quite hawkish. Will he say, hey, yeah, we could have gone 100 basis points? I mean, I don't know. It remains to be seen. But, certainly, we'll be keeping a close eye on that.

BRAD SMITH: Whether it's hey yeah or hey ya, we're going to be paying close attention to whatever St. Louis Fed President James Bullard says. We appreciate the breakdown here this morning, Jen. We'll check in later.