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Fed Official Says Inflation Remains Too High -- WSJ

The Wall Street Journal · 01/06/2023 11:43

By Gabriel T. Rubin

NEW ORLEANS -- Federal Reserve Governor Lisa Cook noted recent signs that inflation has cooled -- but said it has to fall much more to reach acceptable levels.

"Inflation remains far too high, despite some encouraging signs lately, and is therefore of great concern," Ms. Cook said in remarks prepared for delivery Friday at the Allied Social Science Associations conference here.

"I would caution against putting too much weight on the past few favorable monthly data reports," she added.

The Fed raised interest rates aggressively last year, including by unanimously approving a 0.5-percentage-point increase in its policy rate last month. The increase followed four larger increases of 0.75 point and brought the rate to a range of 4.25% to 4.5% -- a 15-year high.

In the minutes of the central bank's December meeting released Wednesday, Fed officials were vocal in their intent to keep interest rates high to lower inflation.

Consumer prices climbed 7.1% in November from a year earlier, down sharply from the 7.7% increase in the 12 months through October, according to the Labor Department's most widely followed inflation gauge. That extended a trend of falling inflation since this year's peak of 9.1% in June, but the November reading remained well above the 2.1% average rate in the three years before the pandemic. Economists estimate that a report to be released next week will show inflation cooled further in December.

Fed officials, including Ms. Cook, have noted that price increases for goods have slowed recently, in part because supply-chain bottlenecks have eased. Housing costs, another main source of price pressures, are expected to ebb in the coming months.

She said, however, that the Fed remains concerned about inflation in other services because of rapid wage growth in the tight labor market.

"Inflation in other core services -- a large category that covers activities as varied as travel and recreation to medical and legal services -- has remained stubbornly high," Ms. Cook said.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

(END) Dow Jones Newswires

January 06, 2023 11:43 ET (16:43 GMT)

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