All three US Fed dissenters call for rate hikes

All three Federal Reserve policymakers who dissented from this week's decision to keep US interest rates unchanged said Friday that rates should rise now to reduce the risk of inflation becoming entrenched.

The Fed held rates at 3.50-3.75 percent for a fifth straight meeting on Wednesday. Three of the 12 committee members dissented in favor of a quarter-percentage-point increase.

Beth Hammack, president of the Cleveland Fed, said inflation had been too high for too long. “The longer that high inflation persists, the more challenging and costly it can be to bring it back down,” she said.

Minneapolis Fed President Neel Kashkari said it was necessary to “tighten policy incrementally as we gather more data on the path of inflation and employment.” He said a possible series of small moves would be better than waiting and later deciding that bigger action was needed if inflation remains high.

Dallas Fed President Lorie Logan also called for “modest action” now to reduce the need for potentially sharper hikes later. Logan said current interest rates were not sufficiently restrictive on economic activity and that, unless there was an unanticipated shock, inflation was likely to remain above target.

The Fed's inflation target is 2 percent, a level inflation has not hit in more than five years. Fed Chair Kevin Warsh has said since taking office in May that he is committed to the target, but has not detailed how he thinks the central bank should reach it.

Before taking office, Warsh expressed support for lower interest rates, in line with President Donald Trump's position. Thirty-year Treasury bond yields rose to their highest levels since 2007 after this week's Fed meeting.