Fed's George: Could take higher interest
rates for longer to encourage saving
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[November 23, 2022]
(Reuters) - The Federal Reserve may need to raise interest rates
to a higher level and hold them there for longer in order to
successfully moderate consumer demand and bring down high inflation
given the amount of spare savings households still hold since the
pandemic, Kansas City Fed President Esther George said on Tuesday.
Kansas City Federal Reserve Bank President
Esther George addresses the National Association for Business Economics
in Denver, Colorado, U.S. October 6, 2019. REUTERS/Ann Saphir/File Photo
"The dynamics of this excess saving and the distribution...is a
key factor shaping the outlook for output, inflation and
certainly for interest rates," George said during an economics
conference hosted by the Central Bank of Chile in Santiago.
"Higher saving of course can lessen a precautionary pullback in
consumption, and it could well take a higher interest rate for
some time to convince households to hold on to their savings
rather than spend it down, and that of course (is) adding to
(Reporting by Lindsay Dunsmuir; Editing by Leslie Adler)
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