Fed officials stress need for rate hikes to curb inflation

Two officials from the US Federal Reserve said that action is needed now to return inflation to the targeted 2 percent level.

According to Reuters, Cleveland Fed President Loretta Mester stated that inflation has remained above 2 percent for more than five years, adding that she is not confident it will return to the target on its own.

She added that raising the federal funds rate would help restrain economic activity and reduce inflationary pressures, noting that the economy can handle higher interest rates given the stability of the labor market.

Minneapolis Fed President Neel Kashkari, in a separate statement, expressed concern about inflation. He said the central bank should have raised interest rates on Wednesday, calling it the first step in a series of increases.

He noted that if inflation declines, the Fed could slow or pause rate hikes "without unnecessary impact on the real economy."

Dallas Fed President Lorie Logan was the third official to support raising the central bank's benchmark rate by a quarter percentage point this week from the current range of 3.50 percent to 3.75 percent.

The vote to keep rates unchanged passed by a margin of 9 to 3.