How high will US interest rates go?


TsLombard with the note.

The Fed, no longer chasing, is back where it was before inflation became transitory – waiting to see whether inflation picks up in response to growth or continues its trek back to 2%. At this moment, with the 5.5% funds rate on its mark with the Taylor rule, and inflation generally decelerating, however slowly, the Fed has communicated it can wait and wait it will.

Assume for the moment no recession in 2024 (not my call, but what if) and inflation is stable in a 3% to 4% range — would the Fed hike to push inflation to 2% during an election year?

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.