On Tuesday’s broadcast of Bloomberg’s “Balance of Power,” Rep. Troy Downing (R-MT) stated that Federal Reserve Chair Kevin Warsh doesn’t have any choice but to hike rates due to inflation numbers “not hitting the target” and hiking rates is “the direction we need to go.”
Downing said, “I expect an increase. And just watching these inflation numbers not hitting the target and all of the things that are coming into contribute [to] that, I think that Warsh really has no choice other than to have a slight increase there. I don’t think the administration is going to be enamored by that, but I think it’s good policy, and it really shows that the Fed is taking the policy seriously. And it’s always difficult to do something right before an election, but I think that this is something that is due and will be helpful in starting to cool some of that down as we see inflation that hasn’t hit targets.”
He added, “I think everybody is looking at energy costs right now and what’s going on [with] that. And I think that everybody knows that this is a temporary situation that has other influences going on right now, namely, what we’re still seeing in the Middle East. And, in terms of the interest rates, still, I think that, looking at what we have seen in inflation, I would be really surprised if we didn’t see a modest, probably 25 bip increase in that policy. Obviously, I don’t have a crystal ball, but that’s what I’m expecting, and I don’t believe that that’s bad policy, I think that’s the direction we need to go.”
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