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MNI: Fed's George Expects Policy Rate To Rise To 2% By August

(MNI) Washington

Kansas City Fed chief says evidence that inflation is clearly decelerating will inform judgments about further tightening.

Federal Reserve Kansas City Fed President Esther George said Monday she expects the central bank's policy rate to move up by about 1 percentage point by August, and subsequent policy moves to be determined by evidence that inflation is clearly decelerating.

"I expect that further rate increases could put the federal funds rate in the neighborhood of 2 percent by August, a significant pace of change in policy settings," she said in remarks prepared for the Kansas City Fed Agricultural Symposium. "Balance sheet reduction plans will also be underway as a tightening mechanism, with financial markets far more unsettled currently than in 2017, when the Fed last initiated a rundown in the size of its balance sheet."

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Federal Reserve Kansas City Fed President Esther George said Monday she expects the central bank's policy rate to move up by about 1 percentage point by August, and subsequent policy moves to be determined by evidence that inflation is clearly decelerating.

"I expect that further rate increases could put the federal funds rate in the neighborhood of 2 percent by August, a significant pace of change in policy settings," she said in remarks prepared for the Kansas City Fed Agricultural Symposium. "Balance sheet reduction plans will also be underway as a tightening mechanism, with financial markets far more unsettled currently than in 2017, when the Fed last initiated a rundown in the size of its balance sheet."

Keep reading...Show less