The Federal Reserve (Fed) has been trying to combat inflation in every possible way. The combined efforts are part of a vision to curb inflation and minimize the possibility of an upcoming recession.
During the FOMC meeting last month, the Fed also hiked interest rates by 75 BPS. Global nations are fearing the possibility of an incoming recession. However, some countries are even going through a recession, according to analysts.
Chicago Fed President Charles Evans stated on Monday that the Fed can bring inflation down without causing a surge in unemployment. This talk comes at a time when the Fed is raising interest rates to control inflation.
Evans says that the Fed can bring down inflation by avoiding recession
During the conference of the National Association for Business Economics, he gave his insights on how interest rates will float around. He mentioned that he expects the interest rates to rise a bit above 4.5% next year. Evans also added that he expects interest rate to stay the same for some time.
“I think we can bring inflation down relatively quickly while also avoiding a recession.” It should allow the Fed “to disinflate without a large increase in unemployment if we navigate the path to a reasonably restrictive policy setting carefully and judiciously,” Evans stated.
The Fed expects the unemployment rate to hit 4.4% by the end of next year from the current 3.5% as of September. It also expects the inflation rate to drop to 2.8%, closer to its 2% target.
Before the last interest rate hike, analysts were bracing for a full percentage point hike. According to historical data, the Fed has never hiked interest rates by a full percentage point since the 1990s. The Fed has stated that they would not be afraid to take a risk in the proper circumstances.