Federal Reserve's Harker Says Inflation Too High, Action Needed

Federal Reserve's Harker stated that the current monetary policy is not restrictive enough, and inflation remains too high, necessitating action. After discussions with businesses in the Fourth Federal Reserve District, economic data and feedback from companies indicate that many are facing double-digit increases in input costs. Harker mentioned that a leader of a medium-sized manufacturing firm in northeastern Ohio believes that despite the industry's typical sensitivity to high interest rates, the Federal Open Market Committee (FOMC) should still raise rates. Currently, inflation is above 3%, and the labor market is stable, close to estimated maximum employment levels. Businesses in the Fourth District report ongoing cost increases, facing tough choices. Harker emphasized that economic data and business feedback convey the same message: policies have not reached a sufficiently restrictive level, and the longer inflation remains above target, the harder it will be to bring it down. She stated that she will continue to monitor data and business feedback.

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