US Fed Hawkish Officials Say 'Cannot Rule Out Interest Rate Hike' Ahead of Kevin Warsh's Appointment

US Fed Hawkish Officials Say "Cannot Rule Out Interest Rate Hike" Ahead of Kevin Warsh's Appointment

Minneapolis Fed President: "Serious about combating inflation... New Fed Chair only casts one vote out of 12."

Boston Fed President: "Pay special attention to inflation upside risks... Must not rule out tightening scenarios."

As US price indicators showed a stronger-than-expected rise, key officials of the Federal Reserve (Fed) also expressed caution on the rising risk of inflation on the 13th (local time).

According to a Bloomberg report, Minneapolis Federal Reserve (Fed) President Neel Kashkari assessed at a public event hosted by the local Chamber of Commerce that the US labor market has somewhat improved compared to earlier this year, while inflation has worsened due to the war with Iran.

He reaffirmed his previous stance that the possibility of interest rate hikes should remain open, stating, "We are truly serious about our mission to bring inflation back down."

President Kashkari was one of three regional Fed presidents who, at the Federal Open Market Committee (FOMC) meeting held on the 29th of last month, voted to keep interest rates unchanged but opposed the inclusion of the phrase 'easing bias' in the policy statement.

He previously stated in a statement on the 1st that "the FOMC should signal a policy outlook that the next interest rate change could be either a cut or a hike, depending on how the economy evolves."

Regarding whether Kevin Warsh, the nominee for the new Fed Chair who is expected to take office as early as this week, will proceed with interest rate cuts as requested by President Trump, he said, "The Fed Chair has significant influence and sets the agenda, but in interest rate decision votes, they are just one of 12 voters." He added, "Regardless of who becomes Chair or under what circumstances, the new Chair will have to persuade their fellow committee members that the agenda they have set is the best course of action."

Boston Fed President Susan Collins also stated that the Fed might have to raise interest rates if inflationary pressures do not ease.

In a speech at the Boston Economic Club today, President Collins said that the possibility of the Middle East conflict not being resolved soon and a more unfavorable scenario unfolding has increased, adding, "Special attention is needed for inflation upside risks."

Regarding the monetary policy outlook, she commented, "My patience for just letting another supply shock pass by has diminished due to inflation consistently exceeding our target (2%) for over five years."

She continued, "While I hope that monetary policy normalization can resume later this year, we cannot rule out scenarios where some policy tightening may be necessary to ensure inflation sustainably returns to 2%," not closing the door on potential interest rate hikes.

Meanwhile, the US Federal Senate approved the confirmation of Kevin Warsh as the next Fed Chair nominee today.

The term for the Fed Chair is four years, and current Chair Powell's term ends on the 15th. Warsh is expected to be sworn in as the new Fed Chair as early as this week.