Fed official expects 2.5% policy rate by year end

US central bank could raise rates by 50 basis points a few times this year, but higher hikes not necessary, says Chicago Federal Reserve head

By Ovunc Kutlu

ANKARA (AA) – Due to record high inflation, the US Fed’s policy rate should be in the target range of 2.25%-2.5% by the end of this year, according to the head of the Chicago Federal Reserve Bank.

"If we get to 2.25% to 2.5% rates by December, we will be able to look at where inflation is," Charles Evans said Tuesday in a speech at the Economic Club of New York.

Evans said the Fed could raise interest rates by 50 basis points a few times during the year, adding that hikes of more than that would not be necessary.

On March 16 the Fed started its monetary tightening with a 25-basis point increase to 0.25%-0.5%, and a 50-point hike is expected on May 4.

Annual consumer inflation in the US soared to 8.5% in March, the highest rate since December 1981.

Producer prices jumped 11.2% in March from the same month last year, its highest annual gain since November 2010.

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