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The Fed: Fed’s George urges caution while backing further rate hikes

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The Federal Reserve needs to continue raising interest rates but should be careful about the pace of these moves, said Kansas City Fed President Esther George on Friday.

“We may have to keep at this for a while. You may see the terminal fed funds rate higher and have to stay there longer,” given the persistence of inflation, George said, in a live-streamed discussion with economist at S&P Global.

“I’m more cautious maybe than most about how quickly we do that and how aggressively we do that,” George added.

The Kansas City Fed president, who is retiring in January, said that the full effect of the central bank’s 300 basis points in rate hikes so far this year have not been felt on the economy.

George said there are some signs that the tight labor market is easing.

At the same time, firms are holding onto people given how hard it is to find workers, she said.

Overall, the labor market is “unusually tight right now,” she said.

Fed watchers expect the central bankers to vote for another 0.75 percentage point rate hike at the central bank’s policy meeting November – which would be the fourth straight super-sized rate hike since June.

The central bank has penciled in slowing down to a half-percentage point hike in December.

But some analysts said the Fed might have no choice but to hike by 0.75 percentage points again in December, especially if future monthly consumer-inflation reports come in as hot as the September data released on Thursday.

Stocks
DJIA,
-0.52%

SPX,
-1.28%

opened lower on Friday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
4.013%

rose close to 4%.

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