US Likely to Have Six Rate Hikes This Year, Two More in 2023, Atlanta Fed Chief Says

 Federal Reserve Building - eagle  - Sputnik International, 1920, 21.03.2022
WASHINGTON (Sputnik) - The United States will likely have six rate hikes this year and two more in 2023 as surging inflation forces the Federal Reserve onto a path of aggressive monetary tightening, the central bank’s head for the Atlanta region, Raphael Bostic, said.

"I predict six rate hikes this year and two more next year," Bostic, the Atlanta Fed president, told a live-streamed event. "I am comfortable with more aggressive rate hikes if the data suggests that's appropriate."

Bostic, however, said potential economic fallout from the Ukraine conflict, along with other uncertainties, has "reduced confidence in the appropriateness of a highly aggressive rate path."

The Federal Reserve approved last week a 25-basis point increase, its first hike since the outbreak of the COVID-19 crisis in March 2020.

The central bank cautioned that there could be as many as six more rate hikes this year, based on the number of calendar meetings for its policy-making Federal Open Market Committee (FOMC).

Following through with the Wednesday rate decision, Fed Governor Christopher Waller, a FOMC member, said US economic data is "screaming" for bigger half percentage point rate hikes in coming months to stamp out inflation.

Fed Chairman Jerome Powell reiterated after this week’s rate increase that the central bank will be "nimble" as it tries to balance the fastest economic growth in nearly four decades with inflation, also growing at its most frenetic pace in 40 years.

US gross domestic product was up 5.7% last year after a 3.5% contraction in 2020, growing at its most since 1984. Inflation, measured by the Consumer Price Index, expanded by 5.8% in 2021, its most since 1982. The Fed’s own tolerance for inflation is just 2% per annum.

Bostic forecast GDP at 2.8% for 2022 and inflation at 4.1% by the year-end if the Fed enforces the rate hikes he advocated.

He also predicted that inflation will return to the Fed’s targeted 2% rate by 2024 if the central bank remains vigilant in monetary tightening.
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