https://www.ft.com/content/31d4ab69-c017-4d0f-967e-f0ef185c7b33?segmentId=b385c2ad-87ed-d8ff-aaec-0f8435cd42d9
In an interview with the Financial Times, Thomas Barkin, president of the Fed’s Richmond, Virginia, branch, said the central bank had already shifted its monetary policy towards much tighter settings to rein in the worst price pressures in roughly four decades.
However, he said that in order to restore price stability, the Fed would need to tighten policy further so that so-called real interest rates, which are adjusted for inflation, sit above zero.
“You do have to move to a level where inflation expectations come down in order to have enough restriction on the economy to bring inflation down,” Barkin said on Tuesday. “The destination is real rates in positive territory and my intent would be to maintain them there until such time as we really are convinced that we put inflation to bed.”
Several of Barkin’s colleagues, including John Williams of New York, have recently indicated that the federal funds rate will probably need to rise above 3.5 per cent and remain there in 2023. That is well above its current target range of 2.25 per cent to 2.50 per cent. Cleveland’s Loretta Mester, meanwhile, backed rates rising above 4 per cent by early next year.
Those levels “would not surprise me at all”, said Barkin, who noted he favoured using near-term inflation expectations to calculate what constitutes a positive “real” interest rate.
In terms of how fast the Fed should move to reach such a threshold, he said: “I have a bias in general towards moving more quickly, rather than more slowly, as long as you don’t inadvertently break something along the way.”
Åpner FED for å øke renta med mer enn 0.75% om 2 uker?
ps: når FED snakker om “rente over inflasjon” så snakker de om rente over core PCE, ikke CPI antar jeg.