Top Federal Reserve official predicts inflation will surge past target rate for 'couple of years': 'Recession risks are going up'

Federal Reserve President Loretta Mester predicted Sunday that it will take several years before inflation subsides to the Fed's targeted level.

Last week, the Federal Reserve raised benchmark interest rates 0.75%, the most aggressive hike in more than a quarter-century. The benchmark rate could be as high as 3.4% by the end of 2022 and rise even higher to 3.8% in 2023, CNBC reported.

What are the details?

Mester, president and CEO of the Federal Reserve Bank of Cleveland, explained on CBS' "Face The Nation" that inflation is not hitting its target range any time soon.

"It isn't going to be immediate that we see 2% inflation, and it will take a couple of years, but it will be moving down," she said.

The Federal Reserve aims to maintain an inflation rate of approximately 2%. The Fed explains the reason why:

The Federal Open Market Committee (FOMC) judges that inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures, is most consistent with the Federal Reserve’s mandate for maximum employment and price stability. When households and businesses can reasonably expect inflation to remain low and stable, they are able to make sound decisions regarding saving, borrowing, and investment, which contributes to a well-functioning economy.

Mester says she is "not predicting a recession"www.youtube.com

During her interview, Mester fortunately explained that she is "not predicting a recession," but admitted inflationary pressures are increasing the risk of a recession.

"The recession risks are going up, partly because monetary policy could have pivoted a little earlier than it did. We’re doing that now by moving interest rates up, but, of course, there’s a lot of other things going on as well," she said.

"What I want to say, though, is we at the Fed are very committed to using the tools at our disposal to bring this inflation under control and getting it back to 2%," she concluded. "It is the number one challenge in the economy now."

Unfortunately, not every economic expert is confident the U.S. will avoid a recession.

Former Treasury Secretary Larry Summers predicted on Sunday the U.S. will slip into a recession precisely because of action taken by the Fed.

"Look, nothing is certain, and all economic forecasts have uncertainty," Summers said on NBC. "My best guess is that a recession is ahead.

"I base that on the fact that we haven't had a situation like the present with inflation above 4% and unemployment beyond 4% without a recession following within a year or two," he explained. "And so I think the likelihood is that in order to do what's necessary to stop inflation the Fed is going to raise interest rates enough that the economy will slip into a recession."