Fed’s Clarida Believes Interest Rate Hike Could Take Place in Early 2023

The Vice Chairman of the United States Federal Reserve, Richard Clarida, said on Wednesday that an interest rates hike could be suitable by the end of next year.

With the economy continuing to grow, the labor market recovering, and inflation remaining above 2% in line with the Fed’s new guidelines, the central bank will likely have the needed factors to raise rates by the end of 2022, with Clarida seeing an interest rate hike in early 2023, a move that will commence policy normalization.

The Vice Chair also believes discussions around tapering the massive asset purchases, at $120 billion a month, will continue in the coming meetings, with the Fed planning to eventually scale back the current accommodative policies.

Clarida also said that the Fed will provide advance notice before making any changes to the asset purchases, which started as a way to support economic recovery from the coronavirus crisis.

“I could certainly see myself supporting announcing a moderation in the pace of purchases later this year.”

“There are a lot of things going on. I’m looking at it closely.”