Fed’s Rosengren Says Possible Conditions For A Rate Hike In 2022 Could Be Met

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By Jonnelle Marte

Jun 25 (.) – The US economy may reach peak employment and inflation conditions that would warrant an interest rate hike next year, but it will be important to look at the data, the Reserve Bank president said on Friday. Boston Federal Eric Rosengren.

The official, however, declined to provide his projection for interest rates, emphasizing that the Fed’s policy will depend on economic data.

“But it wouldn’t surprise me, based on current projections of what we’re seeing in the data, that that criterion could be met by the end of next year,” he said during an interview with Yahoo Finance.

Rosengren said he expects the US economy to grow around 7% this year and inflation to be slightly above 2% in 2022. While there is still slack in the labor market today, the country could approach full employment at late this year or early next year, he added.

Fed officials agreed at last week’s meeting to leave interest rates near zero and continue to buy $ 120 billion a month in Treasury and mortgage-backed securities until there is “further substantial progress” toward central bank targets for maximum employment and average inflation of 2%.

Rosengren said he believes the target of “additional substantial progress” for inflation has been met, which he expects to slow in 2022 as supply imbalances are resolved. He added that the labor market may meet the Fed’s standard for reducing asset purchases before the start of next year.

“A lot depends on what exactly happens to the economy during the (boreal) summer and fall,” he said.

(Report by Jonnelle Marte. Edited in Spanish by Javier Leira)

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