Amidst inflation concerns former NY Fed official anticipates Fed Reserve Chair Jerome Powell’s rate hike meeting

With inflation concerns rising across the United States, former NY Fed official Joseph Wang anticipates the Federal Reserve’s rate hike meeting, to be led by Fed Reserve Chair Jerome Powell. Interview aired 6/13/2022.

影片文字轉錄稿

JOSEPH WANG: The more important tool that the Fed has is for guidance. And so it's being able to guide the markets towards either, let's say, a redefinition of neutral towards something, let's say, higher than two and a half, three, which Powell has been noting, which would be more reasonable. As you know, the neutral rate is a real rate of 50 basis points, but you have to add inflation to that to get a nominal rate. Now inflation is rising and inflation has different time frames, right? So it would be totally reasonable for him to take that angle to guide towards a higher neutral rate and that would automatically shift the path of policy to more restrictive stance. Alternatively, instead of saying that we're going to get to neutral quickly, Powell can simply say that we're going to move towards restrictive monetary policy, which would totally make sense since inflation is quite high.