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MNI: Fed Seen Taking Swift Steps To Neutral Rates By Summer

(MNI) Washington

The Fed could hike in 50-bp increments until rates reach 2%, then assess how to proceed.

A half-point interest rate increase next week will set the pace for the Federal Reserve's sprint to neutral policy territory by summer to combat soaring inflation, according to current and former Fed officials.

Barring a significant shift in the economic outlook, the FOMC will raise the fed funds rate in 50-bp increments, twice as fast as typical, until rates are near 2.0%, the low end of the committee's estimate of neutral. At that point, officials will re-evaluate how much further to hike rates and at what pace, current and ex-officials say.

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A half-point interest rate increase next week will set the pace for the Federal Reserve's sprint to neutral policy territory by summer to combat soaring inflation, according to current and former Fed officials.

Barring a significant shift in the economic outlook, the FOMC will raise the fed funds rate in 50-bp increments, twice as fast as typical, until rates are near 2.0%, the low end of the committee's estimate of neutral. At that point, officials will re-evaluate how much further to hike rates and at what pace, current and ex-officials say.

Keep reading...Show less