Bloomberg Surveillance · Friday, August 28, 2026
Claudia Salm notes a shift in the US inflation picture, suggesting it might be time for the Fed to consider raising rates. While acknowledging encouraging inflation data, she points to factors like trade tensions, stalled Middle East progress, and AI build-out driving up chip prices as reasons for concern about reaching the 2% target steadily. Salm believes the Fed needs to do more, especially given the potential for getting stuck closer to 4% on PCE inflation.
“I think we're shifting to a place where it would be most appropriate for them to start raising rates. I have been in the hold camp up until about this week, and it's not just on the data.”
“If I look at the outlook a year out, I am not confident we are moving to 2% on a steady clip, I think it's probably time for the Fed to do more. And I think that's where that conversation is at.”
“They might not get a lot worse, but if we get stuck, we're a lot closer to 4% on PC inflation than we are 2%. So you need some good news in the headlines in terms of inflation. And at least in the last week.”