Federal Reserve officials collectively "hawkish": inflation risks rising, further rate hikes not ruled out

BlockBeats News, May 7 — As the Iran conflict continues to push up oil prices and strain supply chains, multiple Federal Reserve officials warn that U.S. inflation risks are heating up again. In the future, interest rates may remain at high levels for a long time, and a further rate hike is not off the table.

St. Louis Fed President Musaleem said that policy risks have clearly shifted toward inflation rising. Interest rates may need to stay unchanged “for a period of time,” and if necessary, they could be increased further. He noted that prices for key industrial inputs such as aluminum, helium, and diesel are rising, driving the spread of broader cost pressures.

Chicago Fed President Goolsby warned that if high oil prices persist for several months, they will gradually disrupt global supply chains and may replay the inflation transmission path seen during the pandemic. He said it is not “stagflation” yet, but if the situation continues, it will become “increasingly tense.”

Data shows that the average U.S. gasoline price has risen to more than $4.50 per gallon. The New York Fed’s Global Supply Chain Pressure Index has also risen to the highest level since July 2022. The market generally expects that the Federal Reserve will have limited room to cut rates over the next year.

The latest PCE data shows that U.S. inflation in March has rebounded to 3.5% year over year, and core PCE rose to 3.2%. Within the Federal Reserve, there is a gradual acceptance of the possibility of “re-hiking rates if necessary.”