Esther George of Kansas City Federal Reserve stated Thursday that higher interest rate are necessary now in order to reduce inflation. She also said that policymakers don’t pay enough attention to the effect that this has on the stock exchange.

CNBC interviewed a central bank official who said that the Fed was looking to tighten financial circumstances, which include equity markets, to slow down the rate of price rises, at the fastest pace since more than 40-years.

George stated that “I believe what we are looking for is transmission of our policies through market understanding” during a CNBC interview.Squawk Box” interview. It’s not targeted at equity markets specifically, but it does seem to be one avenue through which tighter financial circumstances will arise.”

The S&P 500 is teetering on the brink of a bear marketThis is a 20 percent drop from the high. Investors worry about both the rising price and the possible impact on earnings and consumer behaviour that an increase in interest rates might have.

This was done earlier in the month the Fed approved a 50 basis point rate hikeit has stated that comparable-sized increases were likely to be made at its next meetings. The basis point equals 0.01%.

George stated that “we need higher interest rate,” however she added that while George agreed that the Fed’s current pace is satisfactory and that there’s no need to make bigger leaps like the 75-basis point rise suggested by some.

She stated, “Moving carefully and making sure that we keep on track to obtain some rate increases in the economy and then watching how it unfolds is really going to be the focus of mine attention.” “I believe we are good at 50 basis point right now. I would have to see something different to suggest we should go higher.”

George expressed concern about inflation but said that the economy is performing well in other sectors. But, George said she had heard from people in the region and business contacts that prices have been rising. This has caused consumers to alter their behaviour.

Aside from her confidence that the Fed can lower prices through rate rises, she also stated that the Fed has $9 trillion of assets on its balance sheets.

She stated that she believes we can bring down inflation because we have all the necessary tools and financial conditions are tightening. So that is something I believe we will have to pay attention. With all the moving parts we can see today in our economy, it is difficult to determine how much work will be necessary to make this happen.

On June 14-15, the Federal Open Market Committee will meet to set rates. Although the market expects that the FOMC would increase its benchmark borrowing rates by 50 basis point, it is still priced in at close to 100%. There are also slight odds of an even bigger move. CME Group data. The rate currently is set at 0.75-1%.