Chicago Fed President Charles Evans has said that interest rates will need to rise to a range between 4.50% and 4.75%, a more aggressive stance than he has previously embraced that demonstrates the central bank’s hardening resolve to quash excessively high inflation.
Evans also said that he does not see “recession-like” unemployment rate numbers ahead, even as rate hikes stifle economic growth and result in a softening in the labor market to bring inflation back down to the central bank’s 2% goal.
“My own viewpoint is roughly in line with the median assessment,” Evans said in a speech to the Official Monetary and Financial Institutions Forum in London.
The Fed’s latest quarterly summary of policymaker projections showed it expects to raise the policy rate, now in the 3%-3.25% range after last week’s 75-basis-point increase, to 4.4% by the end of this year and to 4.6% by the end of next year.
Evans had previously advocated for interest rates to peak at 4%. He said the change of heart was influenced by the increasing breadth of price pressures seen in recent economic data.
“I had a sobering assessment that we’ve got more work ahead,” Evans said. “I’m optimistic that the peak that we’ve set out is going to be sufficiently restrictive that it could be enough.”
Other Fed policymakers have played down rising volatility in global markets, from slumping US stocks to currency turbulence abroad, and said their priority remained controlling domestic inflation.