Fed: Possible rate hike easing

The effort to slow US inflation may have opened the door for the Federal Reserve to ease further rate hikes, but the bank’s policymakers have left no doubt that they will continue to implement a tight monetary policy policy, until the pressures from the price increases have fully subsided.

A report from the US Labor Department yesterday showed that the consumer price index (CPI) did not increase at all in July compared to June, and this is just one step in a long process according to Fed policymakers, with a labor market in the red , but also the prices of equity securities to rise, suggesting that the US economy needs more than what high borrowing costs will launch in order to normalize.

The Fed is “far, far away from announcing a victory” against inflation, Minneapolis Fed President Neil Cascari said in a speech at the Aspen Ideas Conference, despite welcome news on the path report. of the consumer price index.

Cascari said he “hasn’t seen anything that changes” the need for the Fed to raise interest rates to 3.9% by the end of the year and to 4.4% by the end of 2023.

Interest rates are currently in the 2.25% to 2.50% range.

Cascari is certainly one of the most hawkish Fed officials, as most of his 18 colleagues believe that a less tight policy might be sufficient to achieve the goal of better price control.

Calling the rise in inflation “unacceptable”, Charles Evans, president of the Chicago Fed, said he believed the Fed was likely to need to cap policy rates at 3.25-3.5% this year and to 3.75%-4% from the end of next year, in line with the bank’s chairman Jerome Powell’s intentions at its board meeting in July.

SOURCE: AMPE