MNI: Fed's Evans Sees 50-75BP September Rate Increase

Chicago Fed President Charles Evans told reporters Tuesday that policymakers could slow the pace of rate increases to 50 basis points at the next meeting in September and move to quarter-point hikes after that.

“Fifty is a reasonable assessment, but 75 could also be okay. I doubt that more would be called for,” in September, he said. While recent inflation data have been stronger than expected and there may be a few more of those kinds of reports coming, Evans prefers a smoother rate path to guard against any surprise economic setback.

Quarter-point hikes at the last few meetings this year and the first two or three in 2023 could also be enough to bring down inflation, Evans said, adding that's remained his thinking since submitting June dot plot estimates. “In spite of less favorable inflation reports than I expected in June, I’m still hopeful that that rate path is a reasonable one,” he said.

“Some signs of softness are developing in spending, but the current strong labor market with healthy household and businesses balance sheets should support moderate growth over the remainder of the year,” he said. The head of the ISM's factory survey told MNI Monday he also expects moderate growth through year-end. (See: MNI INTERVIEW: Price Plunge Improves US Factory Outlook -ISM)