Fed's Clarida: Expecting conditions for raising rates to be met by end of 2022

Fed Vice Chair Richard Clarida said on Wednesday that he expects conditions for raising interest rates to be met by the end of 2020 if inflation and employment outcomes meet his forecasts, as reported by Reuters.

Additional takeaways

"Starting Fed rate hikes in 2023 is entirely consistent with US central bank’s framework."

"My forecasts for inflation, employment are similar to median of Fed policymakers’ June forecasts."

"Expecting assessment of maximum employment to be reached by end of 2022."

"Made progress toward goals since setting ‘substantial further progress’ bar for taper of asset purchases in December 2020."

"In coming meetings, Fed will again assess progress toward our goals, will give advance notice of taper."

"Fed policy decisions will depend on outcomes, not outlook, which is uncertain."

"If core inflation hits 3% this year, as expected, would consider it much more than a moderate overshoot of Fed’s goal."

"Seeing upside risks to inflation forecast."

"Under Summary of Economic Projections, median forecast inflation projected to average 2.6% through year-end 2022, 2.5% through year-end 2023."

"Support from fiscal policy, along with monetary policy, can offset constraint of effective lower bound."

Market reaction

US Dollar Index continues to edge higher following these hawkish remarks and was last seen gaining 0.06% on the day at 92.12.