Braking Down The News

Fed Official Says Lingering Inflation Could Change Interest-Rate Outlook

Fed Governor Randal Quarles says he is watching for signs that higher demand will keep prices elevated even after bottlenecks abate

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A top Federal Reserve official warned that extended high inflation through next spring could force the central bank to consider raising interest rates sooner than anticipated.

Fed governor Randal Quarles said Wednesday he still expects higher prices to ease next year as bottlenecks and supply-chain disruptions fade. If the Fed raised rates in response to recent price surges driven by the economic reopening, the central bank could constrict demand at the same moment that supply bottlenecks abate, Mr. Quarles said during a moderated discussion at a conference in Los Angeles. That could lead to undesirably low levels of inflation and employment.

 

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