Rate hikes needed despite cooling prices -Fed officials

STORY: Despite signs of slowing U.S. inflation, the Federal Reserve has left no doubt that it will continue to raise interest rates until it has brought down inflation to its target of 2 percent.

Government data out this week showed that while consumer prices didn’t rise at all in July compared with June, the annual inflation rate is still much higher than the Fed’s goal.

Minneapolis Federal Reserve Bank President Neel Kashkari, the Fed’s most hawkish member, told the Aspen Ideas Conference that the consumer price index report, or CPI, was "welcome" news, but said the Fed is "far, far away from declaring victory" on inflation.

Kashkari said he hasn't "seen anything that changes" the need for the Fed to raise its policy rate to 3.9% by year-end and to 4.4% by the end of 2023.

The rate is currently in the 2.25%-2.5% range.

Kashkari did acknowledge that raising rates so quickly could push the economy into recession, and that a recession could even occur in the "near future."

But most of Kashkari’s 18 colleagues think a little less policy tightening may be enough to bring prices under better control.

Among them - Chicago Fed President Charles Evans, who, while calling inflation "unacceptably high", set his target rate hikes at 3.25%-3.5% this year and 3.75%-4% by the end of next year, in line with what Fed Chair Jerome Powell signaled after the Fed's latest meeting in July.