By Ovunc Kutlu
ANKARA (AA) - The head of the US Federal Reserve Bank of Kansas City said Thursday that the central bank's interest rate increases are not aimed at the US stock market, which has been performing poorly in the last two weeks.
"What we’re looking for is the transmission of our policy through (the) market’s understanding, and that tightening should be expected," Esther George told the CNBC network.
"It’s not aimed at the equity markets in particular, but I think it is one of the avenues through which tighter financial conditions will emerge," added George, who is a voting member of the Federal Open Market Committee (FOMC) this year.
To lower record inflation, the FOMC raised interest rates by 25 basis points in March and an additional 50 basis points May 4. Fed President Jerome Powell also signaled that more 50 basis points rate hikes are on the table in coming meetings.
In the past two weeks, major indices in the US stock market -- the Dow Jones, S&P 500 and the Nasdaq -- have been plummeting as the Fed's monetary tightening will result in less liquidity, and rate hikes increase borrowing costs for businesses and consumers.
"We need higher interest rates," George said. "Making sure we stay on course to get some of those rate increases into the economy and then watch how that’s unfolding is going to be really the focus of my attention."