Fed’s Evans: Support rate hikes by 225 basis points this year

Source: Zhitong Finance

Chicago Federal Reserve Bank President Charles Evans said on Tuesday that he was satisfied with the path of interest rate hikes this year, including two 50-basis-point hikes, which he expects to rise to 2.25%-2.5% by the end of the year. Given the inflation outlook, the Fed is likely to raise interest rates above “neutral” levels next year.

Evans said the U.S. will still face inflation of 3% to 3.5% by the end of 2022. The Chicago Fed president’s comments underscore the need for the Fed to pay close attention to inflation data as it sets interest rates after it soared to 8.5% in March.

Fed officials last month raised their benchmark rate by 25 percentage points and have signaled they will rise at a relatively rapid pace for the rest of the year to bring the benchmark rate to a “neutral” range of 2.25-2.5%. ” level and may have to raise interest rates further.

“By December, we’ll have more data on the micro-level aspects of high inflation, rising prices, how far inflation has expanded, and that’s when we can make a judgment about whether inflation pressures are easing, and if they’re trending down,” Evans said. Not ideal, the level of interest rates will definitely go beyond neutral.”

However, Evans also emphasized that there is no need for the Fed to raise interest rates by more than 50 basis points, and supports the Fed to raise interest rates by 225 basis points this year.

It is worth mentioning that investors are currently betting that Fed officials will choose to raise interest rates by 50 basis points at the upcoming policy meeting. St. Louis Fed President James Bullard also spoke on Monday, saying the Fed should not rule out a larger rate hike, citing a 75-basis-point rate hike proposed by former Fed Chairman Alan Greenspan in 1994. action.

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