KC Fed Pres: We’ll Have to Keep Rates Above 5% Until Inflation Is ‘Convincingly Starting’ to Fall to Goal, Which Won’t Be Until Well into 2024

On Thursday’s broadcast of CNBC’s “Squawk Box,” Kansas City Federal Reserve President Esther George stated that she believes the federal fund rates will be over 5% “until we get the signals that inflation is really convincingly starting to fall back toward our 2% goal” and she doesn’t believe this will happen until well into 2024.

George stated, “I’ll be over 5% and 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% goal.”

She added, “Well, we already know that we’re having an effect on demand and where we really see the persistence in that inflation seems to be in the non-housing part of the services side of the economy. So, I think that’s going to be where I’ll be watching for the real clues to see whether we are getting traction with our policy in that area. And then, again, depending on the broader dynamics, as you see inflation coming down will be the signal. It’s hard to know what that timing’s going to be. So, in my own forecast, I hold that rate high until we see some action on that part, and then I’d be willing to move it.”

CNBC Senior Economics Reporter Steve Liesman then asked, “Is that well into 2024?”

George answered, “It is for me.”

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