Hoenig Says Fed Should Raise Rate To 1% By End Of Summer
Courtesy of Zero Hedge
Reuters reports that the Kansas City hawk says Fed should hike to 1% by the end of the summer, and should sell MBS immediately and certainly by the time the hike at the end of the summer. Not stopping there he says the Fed should promptly proceed to raise rates from 1% to 3% thereafter. Hoenig also noted that the low inflation over the next year would increase as the economic recovery picks up. Of course, a raise in rates, would kill stocks, and promptly push the EURUSD to parity, also killing US exports, which is why we are confident Bernanke will completely ignore this most recent bout of deranged sanity from Hoenig.
From Reuters
A top Federal Reserve Official said on Thursday the U.S. central bank should raise rates to 1 percent by the end of the summer to avoid having to raise borrowing costs abruptly as the economic recovery gains momentum.
"Based on the current outlook consensus, it seems reasonable that the economy would be well-positioned to accept this modest increase in the funds rate," Kansas City Federal Reserve Bank President Thomas Hoenig said in remarks prepared for delivery to a business lunch.
Hoenig is a voter on the Fed’s policy-setting panel and has dissented against the Fed’s exceptionally easy money policies at all three meetings this year.
