Fed Officials Signal Further Rate Tightening as Inflation Persists Above Target

Federal Reserve policymakers are signaling that additional modest interest rate increases may be needed to return inflation to its 2% target. Philadelphia Fed President Anna Paulson and New York Fed President John Williams indicated that further policy tightening before year-end is plausible, citing resilient economic momentum, a steady labor market, and stubborn underlying inflation hovering between 2.5% and 3%. The hawkish rhetoric follows the FOMC's recent 25 basis point hike that lifted the benchmark interest rate to 3.75%-4.00%. Markets now price in a 64% chance of another hike in October.