US Fed official expects sharp rate hikes to tame inflation

Charles Evans, president of the Federal Reserve Bank of Chicago, said he expects the central bank’s interest rate to reach a range of 2.25%-2.5% to tame the US’ record high inflation.

“In a nutshell, inflation is clearly much too high and monetary policy must be repositioned to address this,” Evans said at an event in New York on Tuesday.

“The exact path for policy will depend on the evolution of the economy. But from where we sit now, I support returning the federal funds rate to neutral expeditiously,” he added.

Evans said “it may be necessary” to raise interest rates above neutral for some time to meet the Fed’s inflation target of 2%.

US annual consumer inflation rose 8.3% in April, still hovering around its highest level in more than 40 years. Consumer prices in the US jumped 8.5% on an annual basis in March.

To lower record high inflation, the Fed made its first hike of 25 basis points in March, followed by a further increase of 50 basis points two weeks ago.