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MNI INTERVIEW: Fed Set For Three 50BP Rate Hikes - Kroszner

(MNI) Washington

A more aggressive 75 bp hike is unlikely even as the Fed plays catch-up to inflation, ex-Fed governor says.

The Federal Reserve will probably raise interest rates by half a percentage point in the next three meetings in order to tame a surge in inflation and ensure longer-run price expectations don’t take off, former Fed board governor Randall Kroszner told MNI.

“They’re on a path to raise rates most likely for the next three meetings in 50-basis-point chunks and then it’s maybe time to reassess," he said in an interview. "They want to make sure that inflation expectations don’t become unanchored. They have the opportunity now relatively quickly to make sure they don’t.”

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The Federal Reserve will probably raise interest rates by half a percentage point in the next three meetings in order to tame a surge in inflation and ensure longer-run price expectations don’t take off, former Fed board governor Randall Kroszner told MNI.

“They’re on a path to raise rates most likely for the next three meetings in 50-basis-point chunks and then it’s maybe time to reassess," he said in an interview. "They want to make sure that inflation expectations don’t become unanchored. They have the opportunity now relatively quickly to make sure they don’t.”

Keep reading...Show less