WASHINGTON, July 31 (UPI) -- A move by U.S. Federal Reserve policy makers to increase interest rates could slow inflation and bump up their credibility, analysts said.
Many analysts expect the Fed will likely leave interest rates unchanged after the next Open Market Committee meeting next week.
"At the same time, if those inflation numbers begin to get worse, they recognize they may have to move sooner rather than later," chief economist of Deutsche Bank Securities Peter Hooper told The Washington Post.
Several committee members, including San Francisco Fed President Janet Yellen and regional bank presidents from Dallas, Philadelphia, Richmond, Va., and Kansas City, Mo., have indicated inflation is a primary concern, the Post reported.
"We cannot and will not allow a wage-price spiral to develop," Yellen said this month.
A series of September to April interest rate cuts have focused on restoring liquidity in financial firms. A step to head off inflation may need to be a decisive move, some said.
"If Fed credibility looks a bit shaky, with a weak dollar and high inflation expectations, a one-off rate hike could be a way to shore up your credentials," Michael J. Feroli, an economist at J.P. Morgan Chase told the Post.
