Don’t count out additional interest rate hikes, according to former Federal Reserve governor Randall Kroszner.
Kroszner, who’s now a University of Chicago economics professor, believes rates are staying high into well next year.
“I don’t see how they can be comfortable to say, ‘okay we’re not going to be raising anymore’ if the labor market is as strong as it is now,” Kroszner told CNBC’s “Fast Money” on Wednesday.
His comments came after the Fed released the minutes from its July policy meeting. Fed officials indicated “upside risks” to inflation could push them to raise rates further.
Kroszner, who helped lead the response during the global financial crisis, thinks the Fed won’t officially put the brakes on rate hikes until they “see some of the heat coming out of the labor market.” He also believes Fed members will be at odds at what they need to see.
‘Makes the Fed’s job a little bit harder’
With student loan repayments set to resume in the fall and the back-to-school season kicking off, consumer confidence is another area the Fed is watching, Kroszner added.
“The consumer has been pretty resilient and that’s great, but it also makes the Fed’s job a little bit harder,” he said. “They’re going to want to see a little bit less strength there before they’re going to be able to to feel comfortable to say okay, no more hikes.”
Source: Finance - cnbc.com
