The Federal Reserve will raise interest rates in March, followed by one or two more in 2018, former Fed Gov. Randall Kroszner predicted Thursday night.

“I think it’s very likely in March unless there’s some sort of big change in inflation outcomes or some other shock,” Kroszner said at the University of Chicago Booth School of Business' Annual Economic Outlook conference in Manhattan, adding that if as he suspects 2018 turns out to have good economic growth in the U.S. and the rest of world then it “would be likely that the Fed would take other action even if we’re not seeing a rise in inflation.”

And even if inflation underperforms, and continues to miss the Fed’s 2% target, Kroszner believes the hikes will occur.

“It’s still a bit of a puzzle” why inflation hasn’t risen as expected given the tight labor market, Kroszner said, noting he's seen a rise in inflation expectations in recent weeks.

former Fed Gov. Randall Kroszner
Former Fed Gov. Randall Kroszner Bloomberg News

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.