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The Fed: Kansas City Fed’s George kicks off Jackson Hole saying inflation remains broad-based and there is ‘more work to be done’

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It remains far from clear whether the easing in U.S. inflation in July is the start of a trend, Kansas City Federal Reserve President Esther George said Thursday.

“We still have high inflation. We saw some easing in the July numbers, but I think it remains broad -based, so there’s more work to be done,” George said in an interview with CNBC.

The Kansas City Fed is the host of the Fed’s Jackson Hole, Wyoming, summer symposium and George does a series of interviews that signal the unofficial start of the conference.

George wouldn’t get dragged into the debate over the size of the expected interest rate hike in September, saying there would be more inflation and jobs data before the central bank’s meeting on Sept. 20.

She said it remained unclear how high the Fed would need to ultimately push interest rates to get inflation under control. She said that getting rates above 4% was possible and that even over 5% couldn’t be ruled out.

The Fed has pushed rates to a range of 2.25%-2.5% since March, included two 0.75 percentage point rate hikes in June and July.

Fed officials have been debating whether to slow the pace to a half percentage point move in September or continue with the faster pace.

Inflation has spiked to the highest levels in 40 years as the economy reopened in the wake of the coronavirus pandemic. The consumer price index has risen at an 8.5% pace in July, down from a 9.1% rate in June. The Fed has a 2% target for inflation rate.

In a separate interview with Bloomberg, George said that the economy was “still sorting itself out.”

It is likely that unemployment will rise as the Fed tightens policy further, George said.

One of the goals of this year’s Jackson Hole conference is to remind the Fed what are the key factors of stable inflation, George said.

The Kansas City Fed president said that she doesn’t see many signs of a potential recession in her district. At the same time, it was important to remember the full effect of the Fed’s rapid pace of rate hikes has yet to be felt on the economy. And the central bank is allowing its balance sheet to shrink, she noted.

There will be several Fed officials giving interviews ahead of Fed Chairman Jerome Powell’s speech to the conference on Friday at 10 a.m. Eastern.

In an interview with the Wall Street Journal, Atlanta Fed President Raphael Bostic said the choice between a half percentage point and 0.75 percentage point rate hike in September was effectively a coin toss at this point.

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