The U.S. central bank should stand ready to hike interest rates in the near-term if inflation remains above target, the bank's top official said Monday.
"When inflation is well above its target and the labor market is near full employment and stable, any serious policy rule calls for raising the policy rate to bring down inflation," a member of the Federal Reserve (Fed) Board of Governors, Christopher Waller, said at an address in Rome.
Waller said Tuesday's consumer price index (CPI) report will be important.
"If we get another hot reading on core inflation this week, then the (Fed) will need to consider tightening monetary policy in the near term," he said.
The stance is in line with remarks from newly installed Fed Chair Kevin Warsh, who vowed at his first press conference as head that the central bank would achieve price stability.
Waller noted that the 12-month personal consumption expenditures rate in May stood at 3.4%, well above the Fed's 2% target.
The Fed "has to be ready to tighten monetary policy to prevent a repeat of the 2021-to-2022 inflation episode," Waller said.
"Sternly staring at inflation until it melts before our withering gaze is not an option."
Waller said he was aware of the need to avoid "overtightening" and risking a recession, but that dynamics in the labor market and with inflation point policymakers in a clear direction.
"Unless I see evidence of a significantly weakening labor market, my focus will be on inflation," Waller said.
