Nobel Prize-winning economist and former Fed Chairman Ben Bernanke said the Fed could raise interest rates for the last time next week.
Former Fed Chairman Ben Bernanke said he expects a final rate hike from the Fed next week.
Speaking at the webinar organized by Fidelity Investments, Bernanke said, “It looks like the Fed will increase by 25 basis points at its next meeting. This may be the last increase,” he said.
There are similar expectations in the money markets. After the Fed’s July 25-26 meeting, no additional rate hike is priced in.
Bernanke said that with the decline in automobile and rental prices, inflation could fall to the 3-3.5 percent band permanently in the next 6 months. Inflation in the US fell from 4 percent to 3 percent last month, and the Fed’s favorite inflation indicator, the PCE price index, increased by 3.8 percent on an annual basis in May.
Bernanke stated that his expectation of a rate cut this year is unrealistic.
Bernanke also stated that there may be a slowdown in the economy as the price of the effort to reduce inflation, but a ‘moderate’ recession, and said, “We would be surprised to see a deep recession next year.”