New hawkish messages from the Fed

While Fed swaps are pricing that the policy rate will peak at 5 percent for the first time in the first half of 2023, hawkish messages about monetary policy continued to come from Fed officials. Fed Governor Lisa Cook stated that inflation in the US was “unacceptably” high and said that interest rate hikes would continue until price increases were brought under control. Cook said, “Inflation is very high, it must come down and we will do what is necessary until this is resolved,” and added, “This requires interest rate hikes to continue and then monetary policy to be restrictive for a while.” Philadelphia Fed President Patrick Harker also noted that he expects the Fed rate to be “well above” 4 percent by the end of this year. Similar to Cook and many other Fed officials, Harker emphasized that Fed policy will remain “restrictive” next year and said the Fed is prepared to do more if necessary to reduce inflation. Harker stated that the Fed’s progress in reducing inflation has been “disappointing” to date.