Chicago Fed Chairman Charles Evans said the Fed will likely continue to aggressively raise interest rates in the US, despite Wednesday’s inflation data being a positive move.
US Chicago and Minneapolis Fed Presidents Believe There Will Be Aggressive Rate Increases Despite Inflation Data
Minneapolis Fed Chairman Neel Kashkari agreed and said it was unrealistic to expect easing anytime soon.
Bitcoin (BTC)Gained 2% after the news that the inflation rate fell to 8.5% in July from 9.1% a month ago.
According to the CME FedWatch Tool, investors see a 65% probability of a 50bps rate hike in September, rather than a 75bps increase the day before, which was the more likely scenario.
Speaking at an event organized by Drake University in Iowa on Wednesday, Evans said:
“I hope we will raise interest rates for the remainder of this year and next year to make sure inflation returns to our 2% target.”
Evans added that while inflation has slowed somewhat, the pace remains at an “unacceptably high”.
Charles Evans said he expects the Fed funds rate target range to increase from 2.25% to 2.5% by the end of the year to 3.25% to 3.5%, and to 3.75% to 4% by the end of 2023.
His colleague Kashkari has taken a tougher stance, expecting the Fed funding rate to rise to around 4% by the end of this year and nearly 4.5% by the end of 2023. Speaking at the Aspen Ideas Conference on Wednesday, he said today’s data and last week’s strong jobs report did not change his expectation for a rate hike.
Kashkari called the idea “unrealistic” until the Fed is convinced that inflation has returned to its 2% target, as the US central bank cuts interest rates in early 2023.
*Not investment advice.
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