The US Fed is planning rate hikes in 2023, as it is expected to achieve employment and inflation targets – this was disclosed by US Fed Vice Chair Richard Clarida.
He continued, “I believe that these … necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022. Commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework. If my baseline outlook does materialize then I could certainly see supporting announcing a reduction in the pace of our purchases later this year.” In the last sentence he is referring to the US Treasury’s $120 billion monthly purchases of Treasuries and mortgage-backed securities.
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