Former U.S. Federal Reserve Vice Chairman, Roger Ferguson, has given his insights on the possibility of interest rate hikes in a recent interview with CNBC. According to Ferguson, the first rate hike following July is highly likely.
Elaborating on the potential for another rate hike, he points to several factors that could encourage it. The Federal Reserve has already mentioned this as a possibility, and with the economy continuing to perform well, there could be room for one more rate increase if the data supports it.
In the past, the Federal Reserve had raised interest rates for 15 consecutive months in an attempt to tackle inflation. However, in June, they decided to pause the rate hikes.
Ferguson emphasizes that the Federal Reserve operates on a data-dependent approach. While they might have been pleased with the latest reading from the consumer price index (CPI), they still face the challenge of bringing inflation down to the desired 2% level. Inflation might remain slightly higher than 2%, which could potentially necessitate not just one, but even two more rate hikes after July, if the data indicates such a move.
The former vice chairman’s perspective sheds light on the Federal Reserve’s cautious stance on managing inflation and their responsiveness to economic indicators. As they continue to monitor the data, the path of interest rate adjustments remains subject to change based on the evolving economic landscape.
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