US inflation concerns deepen as Fed officials call for higher interest rates

Three Federal Reserve officials have warned that keeping US interest rates unchanged was a mistake, arguing inflation remains too high and may become more difficult to control if action is delayed.

According to CNN, Beth Hammack, Neel Kashkari and Lorie Logan broke with the majority after the Fed voted this week to leave rates unchanged for a fifth consecutive meeting.

The three policymakers said they supported raising rates by 0.25 percentage points.

Hammack said: "Businesses describe pricing pressures as broadening rather than fading, and consumers are expressing despair over persistently higher prices."

Logan argued that "labor, consumption and financial market conditions indicate that monetary policy is not restraining the economy."

Kashkari also pointed to artificial intelligence investment, saying: "massive investment in data centers has also added a new demand element to the high inflation Americans are experiencing."

According to CNN, the Personal Consumption Expenditures price index showed annual inflation eased to 3.7 percent in June from 4.1 percent in May, but it remains well above the Fed's 2 percnet target.

"Every month of above-target inflation compounds the strain on the budgets of American families and businesses," Logan said.

The Federal Reserve has kept its benchmark interest rate at 3.5 percent to 3.75 percent throughout 2026, while policymakers continue to weigh inflation risks against labour market strength.