Former Federal Reserve governor Randall Kroszner believes that additional interest rate hikes may still be on the horizon. Kroszner, currently a professor of economics at the University of Chicago, predicts that interest rates will remain high well into the next year.
Speaking to CNBC’s “Fast Money” on Wednesday, Kroszner stated, “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.”
These comments came after the release of the minutes from the Fed’s July policy meeting, where officials indicated concerns about “upside risks” to inflation which could prompt further rate hikes.
Kroszner, who played a key role in responding to the global financial crisis, believes that the Fed will hold off on putting the brakes on rate hikes until they witness a decline in labor market strength. He also anticipates disagreements among Fed members regarding the necessary conditions for halting rate hikes.
‘Makes the Fed’s Job a Little Bit Harder’
Consumer confidence is another factor the Fed is closely monitoring, especially with student loan repayments set to resume in the fall and the back-to-school season beginning. Kroszner emphasized the resilience of the consumer but noted, “It also makes the Fed’s job a little bit harder. They’re going to want to see a slight weakening before they feel comfortable enough to halt further rate hikes.
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