The governor of the Federal Reserve supports the recent interest rate increases by the central bank.
The Fed raised benchmark borrowing rates at its last two policy meetings. Inflation is at its highest level in more than 40 years.
In addition to the hikes, the Federal Open Market Committee indicated that "ongoing increases will be appropriate."
In prepared remarks for the Kansas Bankers Association, she said that similar sized increases should be on the table until inflation declines in a meaningful and lasting way.
The Board of Governors has not heard from a member since the rate increase was approved. Multiple regional presidents have said in the past week that they expect rates to keep rising until inflation falls.
After Friday's jobs report, which showed an addition of 528,000 positions in July and worker pay up 5.2% year over year, both higher than expected, markets were pricing in a third consecutive 0.75 percentage point move at the next FOMC meeting in September.
She will be watching upcoming inflation data to see how much she thinks rates should increase. The recent data casts doubt on the hope that inflation has peaked.
She said that she would need to see unambiguous evidence of the decline before she incorporated it into her outlook.
There is a risk of high inflation for necessities including food, housing, fuel, and vehicles.
Her comments came after other data showed that the U.S. economy contracted for two straight quarters. She said she expects a pickup in second-half growth and moderate growth in the next five years.
The threat to the labor market is excessive inflation, which if allowed to continue could lead to a further economic downturn, similar to the one we experienced in the 70s. We need to fulfill our commitment to lowering inflation, and I will remain focused on this task.
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