Clarida, from the Fed, defends interest rate hike in 2023

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The economy of United States is on track to meet its goals by the end of next year. job e inflation that the Federal Reserve determined to raise the interest rate, consistent with rising borrowing costs in 2023, said Fed deputy chairman Richard Clarida.

“I believe that these … conditions necessary to raise the target interest rate band will have been achieved by the end of 2022,” Clarida said in comments prepared for a virtual discussion at the Peterson Institute for International Economics. “The start of normalization of (monetary) policy in 2023 will, under these conditions, be fully consistent with our new flexible average inflation targeting framework.”

Clarida said she expects some “fairly healthy” job gains in the US this fall (from the Northern Hemisphere) as factors hampering the job offer dissipate.

“If my baseline scenario materializes, then surely I could see support for announcing a slowdown in our purchases later this year,” he said during a question and answer session, referring to monthly purchases of 12 billion. US Central Bank Dollars of Treasuries and Mortgage-Backed Securities.

Fed Chair Jerome Powell said last week that the job recovery still has room to go before the Fed can begin to scale back its bond-buying program, and that the Fed is clearly a long way from assessing interest rate hikes. , while acknowledging that the central bank is monitoring price behavior carefully to ensure that rising inflation is not persistent.

In the economic projections released in June, the median of Fed officials’ forecasts was two interest rate hikes in 2023.

In her remarks prepared on Wednesday, Clarida said she expects the Fed’s full employment target to be reached by the end of 2022. Though he still expects current high inflation readings to moderate if the Fed’s favorite inflation indicator Fed stay above 3% this year he said he would consider this more than a moderate exceedance of the Fed’s inflation target.

“I believe the risks to my inflation outlook are on the upside,” Clarida said.

He also noted that the rapid spread of the Delta variant of the coronavirus is “clearly” a negative risk, but added that current projections for US Gross Domestic Product (GDP) growth this year, if confirmed, “would be the quickest return. after a recession” in 50 years for the trend of the level of real GDP.