Fed Says Rates Need to Go Higher

In the Asian session on Thursday (April 6), the U.S. dollar index fell, with the latest price of the U.S. dollar at 101.86, a drop of 0.03%. Fed Mester said they would have to go a little bit higher than current rates and then stay there for a while to ensure that inflation falls to 2% on a sustainable downward path.

But that doesn’t mean policymakers will keep raising rates until inflation hits their target, Mester said. She expects “some clear progress” in containing price pressures in 2023, estimating a closely watched measure of inflation to reach 3.75% by the end of the year. But she doesn’t see inflation returning to the Fed’s target until 2025. She said interest rates should rise above 5% and remain there for some time.