No Wavering on Inflation Fight by Fed Officials

In speeches and public appearances Thursday, the presidents of three regional Federal Reserve banks across the nation made clear again that reducing the worst U.S. inflation in four decades dominates the central bank's agenda for 2023.

Their comments came a day after minutes from the Fed Open Market Committee's December meeting showed unanimous agreement in maintaining restrictive monetary policy.

Inflation remains "way too high here in the U.S," Atlanta Fed President Raphael Bostic said in remarks prepared for a conference at the bank's New Orleans branch.

"I and the Federal Open Market Committee remain determined to use our policy tools to bring inflation back toward our objective," Bostic said, referring to the central bank's 2% annual inflation target. "I appreciate recent reports that include signs of moderating price pressures, but there still is much work to do."

Kansas City Fed President Esther George told CNBC in a morning interview that the Fed likely will have to raise its benchmark fed funds rate to 5% or higher. The benchmark rate sits at 4.25-4.5%, with traders expecting a hike of at least 25 bps when the FOMC meets again on Jan. 31

"I have raised my forecast over 5%," George said, noting that inflation appears particularly persistent in the services sector. "I see staying there for some time, again, until we get the signals that inflation is really convincingly starting to fall back toward our 2% target."

George said she doesn't predict a recession but acknowledged that continuing to hike rates "doesn't leave a lot of margin" to avoid one.

St. Louis Fed President James Bullard, speaking to CFA Society St. Louis, said the Fed has made progress in its inflation fight, adding that he's comfortable with the Fed's median forecast for a benchmark rate of 5.1% at the end of the year.

"While the policy rate is not yet in a zone that may be considered sufficiently restrictive, it is getting closer," Bullard said, adding that market-based measures of inflation expectations have declined. "These factors may combine to make 2023 a disinflationary year."

In the face of the Fed's consistent rate hikes since March, the Consumer Price Index (CPI) has dropped five consecutive months to 7.1% on an annual basis in November since peaking at 9.1% in June. The U.S. Department of Labor will release December's CPI update on Jan. 12, with the Cleveland Fed currently predicting inflation will fall to 6.5% in that report.