According to Fed Governor Christopher Waller, the US Federal Reserve must continue to “raise sharply” interest rates in order to bring down inflation. Waller said this on Saturday (local time) at a conference in Dallas, Texas.
However, Waller refused to raise interest rates by 100 basis points. “I think the markets would have a heart attack,” Waller said. “I don’t want to trigger a recession. (…) My goal is just to slow down the economy”.
The Fed did the right thing last time, abandoning its forecast of a half a percentage point rate hike and going for a larger hike of three-quarters of a percentage point. He will endorse a similarly large rate hike at the July Fed meeting if inflation data comes in as he expects. “The Fed will do whatever it takes to restore price stability,” Waller said.
Last increase on Wednesday
In view of the highest inflation in more than 40 years, the US Federal Reserve raised interest rates on Wednesday, the sharpest since 1994. It decided to raise the rate by 0.75 percentage points – or 75 basis points – to the new range of 1.50 to 1.75 percent. This unusually large step had been expected on the financial markets in view of the recent surprising increase in the rate of inflation to 8.6 percent.
In their interest rate outlook, the currency watchdogs had also signaled that they would be making several improvements this year. They are targeting an average interest rate level of 3.4 percent for the end of the year. (apa)
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