Former New York Fed President Dudley said on Thursday that financial markets were underestimating how far the Fed would go to curb inflation, the highest in decades.
Additional rate hike of 0.75 pointsDecideAt a later press conference, Fed Chairman Jerome Powell repeatedly referred to the Federal Open Market Committee’s (FOMC) June quarterly economic outlook (SEP) as the “best guide” for tightening monetary policy. did. The SEP expects the Federal Funds (FF) interest rate target to be 3.25-3.5% at the end of the year, with another 0.5 percentage point hike in 2023.
In an interview with Bloomberg Television, Dudley said: “The Chairman’s mention of June’s SEP three or four times in his press conference suggests the authorities think they will do much more than the market is priced in. It seems to me that
When financial markets rose after the FOMC decision and during Powell’s press conference, Dutley called it a “relief rally” after the FOMC meeting. are being held,” he added, adding that authorities need to tighten financial conditions to achieve a looser labor market and keep inflation down.
Dudley also challenged Powell’s assessment that the Fed had already raised the policy rate into the neutral range, saying “I’m a bit skeptical” given the level of uncertainty, and said he was skeptical of the terminal rate. The ultimate goal) would probably be closer to 4%, he added.
Original title:
Dudley Says Fed Will Hike Much Further Than What Markets Expect(excerpt)