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U.S. Fed official sees first rate hike in late 2022 amid inflation concerns

Jun 19, 2021

Washington DC (USA) June 19: A U.S. Federal Reserve official said on Friday that he expects the central bank's first interest rate hike to come in late 2022 as inflation picks up faster than previous forecasts had anticipated.
"I put us starting in late 2022," St. Louis Federal Reserve Bank President James Bullard said in an interview with CNBC. "I think it's natural that we've tilted a little bit more hawkish here to contain inflationary pressures."
Bullard said he expects inflation to run at 3 percent this year and 2.5 percent in 2022 before drifting back down to the Fed's target of 2 percent.
"If that's what you think is going to happen, then by the time you get to the end of 2022, you'd already have two years of 2.5-3 percent inflation," he said.
"To me, that would meet our new framework where we said we're going to allow inflation to run above target for some time, and from there we could bring inflation down to 2 percent over the subsequent horizon," said the Fed official.
Bullard's remarks came after the Fed on Wednesday kept its benchmark interest rates unchanged at the record-low level of near zero, while reiterating inflation surge is "transitory."
About 13 of 18 Fed officials see the first rate hike occurring by the end of 2023, compared with seven in March, according to the Fed's economic projections released Wednesday.
But Fed Chairman Jerome Powell has played down the significance of these projections.
"These are of course individual projections, not a committee forecast. They are not a plan," Powell said Wednesday at a press briefing, denying any discussion of rate liftoff in a particular year.
Source: Xinhua