According to Randall Kroszner, a former governor of the Federal Reserve, more interest rate increases are not to be ruled out.
Currently a professor of economics at the University of Chicago, Kroszner predicts that rates will remain high long into the following year.
When the labor market is as robust as it is right now, Kroszner said on CNBC’s “Fast Money” on Wednesday, “I don’t see how they can be comfortable to say okay we’re not going to be raising anymore.”
His remarks were made following the Fed’s publication of the minutes from its July policy meeting. “Upside risks” to inflation, according to Fed policymakers, might lead to future rate increases.
The Fed won’t officially stop raising rates, according to Kroszner, who assisted in leading the reaction during the global financial crisis, until they “see some of the heat coming out of the labor market.” He also thinks that the Fed’s members won’t all agree on what they need to see.
The Fed is also keeping an eye on consumer confidence, Kroszner added, as back-to-school shopping is starting and student loan installments are scheduled to restart in the autumn.
The fact that consumers have remained quite resilient is fantastic, but it also makes the Fed’s task slightly more challenging, he said. Before they feel confident enough to say “okay, no more hikes,” they will want to see a little bit less strength there.