Former Federal Reserve Governor: Don't be so quick to assume that the Federal Reserve will no longer raise interest rates!

Randall Kroszner, a former Fed governor who is now a professor of economics at the University of Chicago, said he should not be so quick to rule out the possibility that the Fed will continue to raise interest rates.The federal funds rate will remain high next year。

He said on Wednesday:

"If the job market is as strong as it is now, I don't see how officials can feel comfortable saying, 'OK, we're not going to raise rates again'."

The former governor's comments came after the Fed released its July policy meeting notes, with officials saying "upside risks" to inflation could prompt them to raise interest rates further.

Officials last month raised the federal funds rate by 25 basis points to a range of 5.25-5.5 per cent, a 22-year high. The decision follows a brief pause in June for the 11th increase since March 2022, when the Fed lifted rates from near zero.

In June, most officials thought they would raise rates to a range of 5.5-5.75 per cent this year, implying another 25 basis points later in the year. But inflation has slowed markedly in the two months since they made those predictions. The next FOMC meeting is on September 19-20.

According to Krozner, who developed responses during the global financial crisis,The Fed will not officially stop raising interest rates until they "see the heat in the labor market dissipate"He also believes that,Federal Reserve officials will be divided on what they need to see。

According to the CME Group's Federal Reserve Watch tool, the market currently expects an 86.5% chance that the Federal Reserve will suspend interest rate hikes in September.

The Fed's job remains "hard"

Kroszner added that withStudent loan repayments will resume in the fallandSchool season begins，Consumer confidence is another area of concern for the Federal Reserve。

The Fed is raising interest rates to cool inflation, which is slowing down as officials have long expected, by raising borrowing costs and lowering asset valuesU.S. economic activity remains stronger than expected。

That creates a potential conundrum for Federal Reserve officials, who believe economic demand needs to weaken to bring inflation down to its 2 percent target, according to meeting notes released early this morning.July's "terror data" grew at fastest pace since the start of the yearThis highlights the unexpected resilience of consumers this year.

"It's good that consumers have been quite resilient, but it also makes the job of the Fed more difficult, and they will want to see some weakening there before they can feel comfortable not raising rates again."