In a separate interview Friday morning with CNBC, Mester signaled her forecast in December to raise rates a bit above 5% hasn’t changed much.
Speaking at the same Monetary Policy Forum on Friday, Boston Fed President Susan Collins said inflation is still too high and that the Fed has more work to do.
“Inflation remains too high, and recent data …all reinforce my view that we have more work to do, to bring inflation down to the 2 percent target,” said Collins. “I anticipate further rate increases to reach a sufficiently restrictive level, then holding there for some, perhaps extended, time.”
Also speaking at the conference, Jefferson said a limited supply of workers for jobs needed, which has pushed up wages, suggests inflation may cool slowly.
“The ongoing imbalance between the supply and demand for labor, combined with the large share of labor costs in the services sector, suggests that high inflation may come down only slowly,” he said.
Jefferson also said the forces driving inflation now are different that past inflationary episodes and therefore economic models won’t be as helpful to policymakers. Jefferson said the current situation is different because the pandemic created unprecedented disruptions to global supply chains and is having a long-lasting impact on the labor participation rate.
“The inflationary forces impinging on the U.S. economy at present represent a complex mixture of temporary and more long-lasting elements that defy simple, parsimonious explanation,” he said.
Jefferson says he thinks the Fed is addressing the spike in inflation proactively, unlike in the 1970s and has more credibility now.