Federal Reserve: Interest Rates May Rise if Inflation Doesn’t Cool

The Federal Reserve is now warning that interest rates may need to be raised if inflation does not cool in the near future. According to Fed Governor Michael Barr, he and the Fed would back a rate hike unless inflation shows convincing signs of easing soon. The current federal funds rate target range set by the Federal Reserve is 3.50% to 3.75%, while benchmark 30-year fixed mortgage rates average approximately 6.66% to 6.68%.

Speaking at a banking forum in Washington, the policymaker said he’s concerned about “broader price pressures taking hold” as inflation has remained stuck above the Fed’s 2% target for nearly 5½ years. “If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance,” Barr said in prepared remarks. “However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates.”

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