The Fed’s dovish official and Atlanta Fed President Raphael Bostic said Wednesday (28th) that inflation is worse than expected, so he supports another 5 yards (125 basis points) this year. , 3 yards in November and 2 yards in December. Another dovish official, Charles Evans, predicts the cycle of rate hikes will peak in March next year.
“The lack of progress so far (inflation cooling) makes me think further that we have to move to a moderately restrictive stance,” Postik said in an interview. “To me, that means a policy rate of 4.25-4.50. %. I tend to get there by the end of the year.”
Bostic explained that he originally expected to reduce the pressure on price increases through the improvement of supply chain imbalances in the early summer, but the improvement was not strong enough, so he adjusted his views.
The Fed last week raised rates three yards to 3.00-3.25%, and a dot-plot of rate forecasts, updated quarterly, showed officials had a median rate range of 4.4% at the end of the year, in line with Bostic’s view.
On the same day, Chicago Fed President Evans said at an event at the London School of Economics (LSE) that last week’s dot-plot showed rates would peak at 4.50-4.75% next year, according to his personal forecast. , the peak time will fall in March next year.
Neither Bostic nor Evans has the right to vote this year, Evans will be on the voting committee in 2023, and Bostic will not have the right to vote until 2024.
The Fed’s hawkish interest rate hike to combat the hottest inflation in 40 years has caused turmoil in global markets. However, Postik stressed that the Fed definitely did not ignore what is happening in other parts of the world in its decision-making process, including the situation in the United Kingdom, the Russian-Ukrainian war, and the Chinese blockade, all of which were included in officials’ discussions.
Bostic remains hopeful that the U.S. economy will escape a recession, and forecasts the unemployment rate to rise to 4.1% from the current 3.7%, a slight uptick but the overall numbers suggest the labor market remains strong.
