Fed to raise interest rates to 4% next year, Evans says | Reuters

With consumer prices unchanged last month compared to June, but up 8.5% from a year earlier, inflation is still "unacceptably" high, and the Fed ... Skiptomaincontent1/2ChicagoFederalReserveBankPresidentCharlesEvanslooksonduringtheGlobalInterdependenceCenterMembersDelegationEventinMexicoCity,Mexico,February27,2020.REUTERS/EdgardGarrido/FilePhotoReadMoreRegisternowforFREEunlimitedaccesstoReuters.comRegisterAug10(Reuters)-Wednesday'sconsumerpriceindexreportshowingU.S.inflationdidn'taccelerateinJulywasthefirst"positive"readingonpricepressuressincetheFederalReservebegantighteningpolicy,ChicagoFedPresidentCharlesEvanssaid,evenashesignaledhebelievestheFedhasplentymoreworktodo.WithconsumerpricesunchangedlastmonthcomparedtoJune,butup8.5%fromayearearlier,inflationisstill"unacceptably"high,andtheFedwilllikelyneedtoliftitspolicyrate,currentlyinthe2.25%-2.5%range,to3.25%-3.5%thisyearandto3.75%-4%bytheendofnextyear,Evanssaid.TheremarkssuggestEvans,amongthe19centralbankerswhosetU.S.monetarypolicy,expectstosoonslowwhat'sbeentheFed'ssteepestroundofinterest-ratehikesindecades.Thoughhewasnotexplicitonwhetherhewouldsupportadownshiftassoonasnextmonth,theFedwouldonlyneedtoraiseratesapercentagepointoverthecourseofthenextfourmonthstoreachhisforecastedyear-endrate.RegisternowforFREEunlimitedaccesstoReuters.comRegisterThatwouldbehalfthepaceofratehikesoverthelastfourmonths.Atthesametime,hisexpectationthatrateswilltopoutat4%nextyearsuggestheismorehawkishthanfinancialmarkets,whicharepricingatopfedfundsrateof3.75%tobereachedmid-2023,withratecutstofollow."Ifeellikewe'reinagoodplaceandwecanpivottobemorerestrictiveifinflationgetsoutofhandmorethanwhatI'mthinkingabout,"EvanssaidataneventatDrakeUniversityinDesMoines,Iowa."Butalso,ifthingsgetbettermorequickly,wecannotraiseratesquiteasmuchasI'vejustindicated...Ithinkwe'rewell-positionednowforacoupleofdifferentturnsofthedataoverthenextfewmonths."Evanssaidheexpectsinflationtobecloserto2.5%nextyearbytheFed'spreferredmeasure,thepersonalconsumptionexpenditurespriceindex,thoughstillabovetheFed's2%targetforinflation.SinceMarch,theFedhasraiseditsbenchmarkpolicyrate2.25percentagepoints,includingtwoback-to-backincreasesofthree-quarters-of-a-percentagepointatitsJuneandJulymeetings.AreportlastweekshowingemployersaddedmorethanhalfamillionjobsinJuly-farmorethanexpected-fueledmarketanticipationforathirdstraight75-basispointincreaseinSeptembertoheadoffwhatcouldberenewedinflationarypressuresfromatightlabormarket.AfterWednesday'sCPIreportshowedinflationcoolinginstead,tradersswitchedtobettingonahalf-pointhikeforSeptember.EvansonWednesdaysaidhedidnotthinktherecentjobsreportnecessarilypointedtomoreinflation,"butweneedmoredataonthat."Andhe'llgetit:theFedwillhaveonemoremonthlyreadingontheU.S.labormarketbeforeitsSeptembermeeting,andseveraldifferentmeasuresofinflation.RegisternowforFREEunlimitedaccesstoReuters.comRegisterReportingbyAnnSaphir EditingbyJonathanOatisandMarkPotterOurStandards:TheThomsonReutersTrustPrinciples.MacroMattersEXCLUSIVEBankofKorea'sRheesayspolicytighteningunlikelytoendbeforeFed,articlewithimageMacroMatters·August29,2022·12:43AMUTC·undefinedagoTheBankofKorea(BOK)mustkeepraisinginterestratesuntiltherateofinflationisindecline,butthecentralbanklikelycouldnothaltitstighteningbeforetheU.S.FederalReserve,GovernorRheeChang-yongsaidonSaturday.MacroMattersChinaJulyindustrialprofitsdownasCOVIDcurbs,heatwaveshit,articlewithimageAugust28,2022MacroMattersSenatorWarrenworriesthatFedwilltipU.S.economyintorecession,articlewithimageAugust28,2022GalleryMacroMattersMorningBid:Powell's'pain',articlewithgalleryAugust28,2022GalleryMacroMattersCurrencytopslistofchallengesforEgypt'snewcentralbankgovernor,articlewithgalleryAugust28,2022