Former Richmond Fed President Lacker Says Fed Lacks Inflation Urgency

Former Federal Reserve Bank of Richmond President Jeffrey M. Lacker said the Fed should have raised interest rates at its Oct. 28 meeting, arguing that policymakers have shown too little urgency as inflation remains above their 2% goal.

“I think the case for moving is strong. I’m surprised by their lack of urgency,” Lacker said. He said the decision to hold rates did not surprise him because officials had signaled they would wait.

The Federal Open Market Committee kept its federal funds target range at 3.75% to 4% in a 10-2 vote. Lisa D. Cook and Beth M. Hammack dissented, each favoring a quarter-point increase. The committee said inflation remained elevated and that it needed more information to assess the appropriate policy stance for returning inflation to its 2% goal. The Oct. 28 hold and two dissents were covered previously.

Data released the following morning showed the personal consumption expenditures price index rose 0.5% in September and 3.6% over 12 months. The core index, which excludes food and energy, increased 0.3% for the month and 3.1% year over year. Both annual readings remained above the Fed’s 2% goal.

Lacker warned that relying on quarter-point increases could leave the Fed further behind inflation and raise the risk of a larger, half-point move later. He forecast a rate increase in December followed by more than one increase in the first quarter of 2027.

“I think they’re going to need to get to near five on the funds rate or over to get inflation down,” Lacker said.