Live News Updates: Johnson appoints 12 ministers after a week of resignation

Two senior Federal Reserve officials have warned that failing to rein in rising inflation will hurt the US economy, with one saying the situation is already testing the central bank’s credibility.

Christopher Waller, a Fed governor, and James Bullard, president of the St. Louis branch, used separate events to insist the central bank is determined to fight runaway prices.

“Inflation is a tax on economic activity, and the higher the tax, the more it suppresses economic activity,” Waller said at an event hosted by the National Association for Business Economics.

“So if we don’t get inflation under control, inflation alone could give us a really bad economic outcome going forward,” added Waller, who, like Bullard, is one of the most restrictive policymakers.

Those concerns were shared by Bullard, who spoke Thursday at an event organized by the Little Rock Regional Chamber in Arkansas. He warned that economic conditions were already “stressing the Fed’s credibility on its inflation target.”

With an annual rate of 4.7 percent as of May, the so-called PCE core inflation is well above the 2 percent target of the Fed.

Waller and Bullard back the Fed with another 0.75 percentage point hike when its monetary policy committee meets later this month, after making the first such hike since 1994, when it met in June.

“We may have to take the risk of causing economic pain,” Waller said Thursday, though he stressed recession fears were “overblown.”

Read more about the Fed here Live News Updates: Johnson appoints 12 ministers after a week of resignation

Adam Bradshaw

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