Federal Reserve's Esther George Anticipates Additional Rate Hikes, Sees Rates Staying Above 5% Well Into 2024

Kansas City Federal Reserve President Esther George sounded pretty hawkish Thursday morning during an interview on CNBC's "Squawk Box."

"We have been moving our forecasts up to higher levels ... and I think holding that until we get confidence that inflation is actually coming down is really the message we’re trying to put out there," George said.

What To Know: The Kansas City Fed President will retire from her role in mid-January and she was urging colleagues to stay the course until the job is done in the ongoing fight against inflation.

George told CNBC she believed the Fed should raise rates above 5% and keep them there until there was substantial evidence that inflation was firmly headed lower. 

At the central bank's last meeting, the Fed raised its target federal funds rate by 0.5% to a new range between 4.25% and 4.5%. 

In a press conference following the decision on rates, Fed Chair Jerome Powell reaffirmed the central bank's commitment to bringing inflation back down to its 2% goal.

Although he acknowledged that recent data was encouraging, he indicated that it was not enough. 

"The inflation data received so far from October and November show a welcome reduction in the monthly pace of price increases, but it will take substantially more evidence to get confidence that inflation is on a sustained downward path," Powell said at the time.

November meeting minutes, which were released this week, show that inflation remained a top priority for the Fed. The central bank reaffirmed its 2% inflation goal and discussed risks associated with a potential pivot.

Related Link: Fed Minutes: Getting Inflation Under Control Still 'Likely To Take Some Time'

Why It Matters: George told CNBC she expected rates to go higher than she previously did and remain elevated well into 2024.

"I have raised my forecast over 5% ... and I see staying there for some time," George said.

Despite her hawkish tone, George said she isn't anticipating a recession. 

"Not my forecast, but I do understand that bringing demand down creates that sort of possibility," George said.

SPY Price Action: The SPDR S&P 500 SPY moved lower following George's interview. 

The SPY was down 0.99% at $379.90 at time of publication, according to Benzinga Pro.

Photo: ctj71081 from Flickr