The chairman of the Chicago Federal Reserve did not rule out the possibility that the central bank interest rate could reach 2.5% by the end of the year as part of the central bank’s effort to curb inflation.
“If we reach 2.25% to 2.5% by December, we can then see where inflation is,” said Charles Evans in a speech to the Economic Club of New York.
If the Fed raises interest rates to 2.5% by the end of the year, the central bank will then be able to reassess its stance, according to Evans. “We are moving to adjust our interest rates to a normal level and then we will see,” he said.
It also left open the possibility that the Fed will start raising interest rates by 50 basis points during the year, with the prospect of surpassing the 3% level at some point.
Evans is among many Fed executives who have made it clear they plan to raise interest rates quickly this year after pushing inflation above 8% for the first time in 40 years.
The official, however, appeared optimistic that the central bank will be able to carry out interest rate hikes without significantly hurting the economy. As he noted, the US economy will continue to grow, albeit at a somewhat slower pace next year.
Source: Capital
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