Fed's Esther George says higher rates are needed

Esther George, president of the Federal Reserve Bank of Kansas City, said that households with lots of savings will be able to feel comfortable during tough times. However, in her opinion, raising interest rates is necessary in any case, as it will help cool spending.

During a panel organized by the Central Bank of Chile, George noted that more affluent households spend less, it’s an obvious fact. However, on the one hand, there is the possibility that such households won’t spend more than usual, and on the other hand, perhaps large stocks will push them to spend more.

George also stressed that she cannot but be pleased with the sufficient security of such households, since they will be able to protect themselves in difficult economic conditions. In George's view, in case of a decrease in inflation, officials need to discourage spending.

The U.S. Fed is expected to raise the rate by 0.5% at its upcoming meeting. Thus, according to the pricing of contracts in the futures markets, next year the rate has every chance of growing to 5%.