Former Fed Chairman Bernanke expects rate hike one last time

Nobel Prize-winning economist and former Fed Chairman Ben Bernanke said the Fed could raise interest rates for the last time next week. Former Fed Chairman Ben Bernanke said he expects the Fed to raise interest rates one last time next week. Speaking at a webinar organized by Fidelity Investments, Bernanke said, “The Fed looks set to raise interest rates by 25 basis points at its next meeting. This could be the last hike.” There are similar expectations in money markets. No additional interest rate hikes have been priced in following the Fed’s July 25-26 meeting. Bernanke said that inflation could drop permanently to the 3-3.5 percent band in the next 6 months with the decline in car and rental prices. Inflation in the US fell from 4 percent to 3 percent last month, and the Fed’s favorite inflation indicator, the PCE price index, increased by 3.8 percent annually in May. Bernanke stated that expectations of a rate cut this year are unrealistic. Bernanke also said that the cost of the effort to reduce inflation could be a slowdown in the economy, but it could be a "moderate" recession, adding that "it would be surprising if we saw a deep recession next year."