While three Fed officials said today that the Fed will continue to raise interest rates in the coming months to combat high inflation, they differ on how fast and how far the tightening cycle will go.

Michelle Barr
Fed Member Michelle Barr said the Fed will follow regulatory and supervisory changes in the coming months, including higher capital requirements for the largest banks.
He said the new rules will mean that the largest banks will require an additional $2 of capital for every $100 of risk-weighted assets, and that the increased capital standards will be extended to banks with $100 billion in assets from the previous threshold of $700 billion.
Barr also said that inflation is very high and recent moves in interest rates are part of the process of carefully moving forward. Barr said the Fed is close to reaching its maximum employment and price stability targets, but still has some work to do. He added that interest rates are close to being restrictive, but that the FED still has work to do.
Loretta Master
Cleveland Fed Chair Loretta Mester said re-raising interest rates would reduce the risk of more aggressive action in the future. Mester said that the Fed's policy is less restrictive than in the past and that the institution will need some tightening to reduce inflation.
He stated that the Fed's rate hikes moderated economic activity and business leaders' concerns about recession were reduced. He also said that the Fed is closer to the end point of the tightening process than it was at the beginning.
Mary Daly
San Francisco Fed President Mary Daly noted that inflation is very high and the Fed should continue to increase interest rates.
Stating that the FED may need a few more rate hikes this year, Daly emphasized the importance of being dependent on data while formulating policy. He said it was appropriate to slow the pace of rate hikes and that the risk of doing too little about rates outweighed doing too much.
He also noted that the Fed could make less or more of a few rate hikes this year, depending on the data. He added that one of the lessons learned from the last cycle is that even if the Fed's balance sheet continues to expand, it can raise interest rates.
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