Bloomberg Surveillance · Wednesday, August 12, 2026
A former Federal Reserve official stated that the Fed has a credibility issue after being above its inflation target for over five years and must act to prove its seriousness. While acknowledging the committee is split, the official believes an interest rate hike is likely if core inflation remains significantly above two percent.
“If core is above two, significantly above two, I think you're going to see the FED raise now. I think it's they have to at this point. As you said, we've been above target for over five years, so the Fed has an issue of credibility. They have to act. They can't just talk about being tough one inflation.”
“I think that we were looking I was there right, So, yes, we waited too long to start raising rates after the pandemic. I think that was clear, and we were early in Philadelphia wanting to raise rates.”
“But these supply shocks, you think the textbook says look through them, right, but they keep coming and they're strategic, they're not just acts of nature, acts of God. We have to really look at these now as something that is more sustainct And I hate to bring up the transient word, but these supply shops aren't so transient, and particularly with respect to Iran.”