50 rate hikes in the next two Fed meetings “make sense” as a base case scenario, New York Fed President and FOMC member said Tuesday. John Williams, as reported by Reuters. Williams said that his view on the neutral rate in the US is for real interest rates to be around 0-0.5% with inflation moving between 2-2.5%, it should be around 2.0-3.0% .
If a higher interest rate is needed, an interest rate for higher inflation is needed. You can imagine circumstances where you don’t need to go over that much, but that will be decided and we’ll learn along the way.
Williams said he has no reluctance to raise the real interest rates above the neutral level if necessary. He is confident that inflation will come down and expressed a need to fix the long-term inflation expectations at 2%.
On the problems in the supply chain, the Fed official said that it is difficult to solve the problems with a very strong demand.
Source: Fx Street
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