Howard Schneider
CHICAGO (Reuters) – The Federal Reserve has a strong consensus to raise its target policy rate to around 4.5% by March and keep it at the central policy rate at that level. Chicago Federal Reserve Bank President Charles Evans said Monday that the bank assesses the impact on inflation and gives supply chains time to recover. , Evans said, after adjusting for expected inflation, the Fed’s policy will be at levels historically associated with price control. ‘ views on appropriate policies, Evans said. “By March, we’re heading towards this 4 1/2 percentage point federal funds rate… Whatever the data, we’re going to have a lot of restrictive measures in place unless there’s really a lot of next two months. There’s not enough time. .”
Evans’ remarks came amid growing concerns that the Fed’s pace of rate hikes could weigh on the global economy and outpace the Fed’s ability to assess the state of the economy. It will have an impact on the real economy.
In a speech at the National Association for Business Economics conference, Evans said interest rates for next year are now to balance the need to dampen demand through rising markets, while allowing more opportunities for supply chains Heal and avoid a sharp rise in unemployment.
“I think we can reduce inflation relatively quickly
and also avoid a recession,” Evans said, citing “unusual” in the economy behavior”, which should allow the Fed “to rise without a substantial increase in the unemployment rate if we are prudent and prudent with reasonably restrictive policy settings.”
While acknowledging recent market volatility, he may “ That sounds pretty optimistic,” but Evans said he believes it’s because of “unusual interactions” between the job market and supply chain, with “labor market pressures having a bigger impact on inflation than usual.”
As higher interest rates dampen demand and reduce “the same dynamics should allow inflation to fall without creating excesses in the economy in the form of significantly higher unemployment,” Evans said
The Fed’s current forecast sees the unemployment rate rising to 4.4% by the end of next year from 3.5% in September, while the Fed’s measure of inflation target fell to 2.8% from September. As of August, the current 6.2% – a big step towards the Fed’s 2% target.
Evans called it a “soft landing that looks good.” “
“While this does represent significant labor market weakness compared to today, these are certainly not recession-like numbers,” Evans said.
The Federal Reserve has raised interest rates from near zero in March to a range between 3 and 3%. 25%, most recently moving fast in three quarter increments Efforts to limit credit and slow demand. Policymakers are expected to approve another three-quarters increase at their Nov. 1-2 meeting.
