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An increasing number of Federal Reserve officials are pushing back against the latest market rally, dismissing recent optimism about an upcoming “pivot” in monetary policy as wishful thinking and warning that the central bank will be forced to continue aggressively raising rates until inflation meaningfully declines.


Markets rallied to their best month since 2020 in July, boosted by optimism that inflation may have peaked and the Federal Reserve could soon pull back on its aggressive tightening of monetary policy.

Not so fast, according to a growing number of Fed officials who have spoken out in recent days and warned that the market is getting ahead of itself by anticipating a monetary pivot, which they argue won’t happen anytime soon.

The Fed is “nowhere near almost done” in its ongoing battle against inflation, while big rate hikes so far don’t necessarily mean the central bank won’t look to continue increasing rates, San Francisco Fed President Mary Daly said in an interview on Tuesday.

Cleveland Fed President Loretta Mester, meanwhile, noted that “we haven’t seen inflation cool at all” and the central bank will need to keep raising rates until it sees “compelling evidence” over several months that inflation has first peaked.

Speaking to reporters on Tuesday, Chicago Fed President Charles Evans also agreed that the Fed will keep raising rates for the foreseeable future, expecting a “reasonable” 50-basis-point increase at the next meeting in September—though he said that “75 could so be OK.”

The recent remarks from central bank officials follow similar commentary from Minneapolis Fed President Neel Kashkari, who told CBS on Sunday that while the Fed still has a “long way” to go, it remains “committed to bringing inflation down… whether we are technically in a recession or not.”