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MNI: Sustained Restrictive Fed Rates Will Be Needed- Evans

(MNI) OTTAWA
(MNI)

Chicago President says the pain is worth it to prevent embedded price gains.

Chicago President Charles Evans said Tuesday the Federal Reserve must keep boosting interest rates to restrictive levels and hold them there until price stability is restored, saying the "difficulties" in slower GDP and job growth are worth it to head off persistent high inflation.

Evans agreed with the FOMC's latest "dot plots" showing the fed funds rate will climb 100 or 125 basis points to 4.4% by the end of the year and to 4.6% next year. The U.S. needs a period of below-trend growth and a weaker job market, Evans said, suggesting like his colleagues that a recession can still be avoided. Other experts have told MNI the Fed has a long history of being slow to tighten and this often results in a slump. (See: MNI INTERVIEW: Fed Needs To Hike To At Least 5%- Bordo)

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Chicago President Charles Evans said Tuesday the Federal Reserve must keep boosting interest rates to restrictive levels and hold them there until price stability is restored, saying the "difficulties" in slower GDP and job growth are worth it to head off persistent high inflation.

Evans agreed with the FOMC's latest "dot plots" showing the fed funds rate will climb 100 or 125 basis points to 4.4% by the end of the year and to 4.6% next year. The U.S. needs a period of below-trend growth and a weaker job market, Evans said, suggesting like his colleagues that a recession can still be avoided. Other experts have told MNI the Fed has a long history of being slow to tighten and this often results in a slump. (See: MNI INTERVIEW: Fed Needs To Hike To At Least 5%- Bordo)

Keep reading...Show less