Federal Reserve Bank rep says expect higher unemployment in 2023, more interest rate hikes
MINNEAPOLIS -- There are plenty of economic concerns among Americans as of late, with rising interest rates and inflation still as high as many can remember.
WCCO's Erin Hassanzadeh talked with Abigail Wozniak, from the Federal Reserve Bank of Minneapolis, to help navigate this storm of inflation, rate hikes and so more.
The bottom line, according to Wozniak, unemployment is expected to go up next year, and rate hikes are expected to continue for the rest of the year and beyond. All of it in hope of staving off inflation.
Wozniak says the fed is hoping inflation might make some significant budging by the end of next year through 2024. We have a ways to go, and there will be short-term pain to get inflation down.
ERIN HASSANZADEH: What does inflation look like in Minnesota right now?
ABIGAIL WOZNIAK: Right now inflation for folks in Minnesota is a little lower than what we're seeing for the country as a whole.
EH: How does that impact unemployment?
AW: The fed is working to prepare folks that our expectation is that we might see more unemployment in 2023 than we've seen in 2022, and that's part of cooling down the economy and helping to bring inflation back down to that target range.
EH: How does the latest rate hike and all of the recent ones impact us in the long term?
AW: What we're expecting is that the rate hikes we've put in place this year will continue to have effects into the future. Folks can expect that credit, anything that has a credit rate attached to it, that'll continue to be more expensive. On the flip side, higher rates for savings vehicles.
EH: Looking forward, what can people expect from the fed in the final quarter of this year?
AW: Folks can expect that the fed will remain committed to returning inflation to its pre-pandemic level, getting it back in line with so many of the other pieces of our economy that got out of line during the pandemic. Inflation is one of the ones we have yet to see get back in line, and we're committed to making that happen. So I think we can expect to see that in the next 12 to 24 months as well.
EH: I think bottom line people are looking for some relief, and so we're talking about a lot of moving parts, but when do you think people will feel some relief? When do you think all of this will even out to the point where we're not constantly talking about inflation or rate hikes?
AW: The absolute goal is that that happens as quickly as possible ... We're starting to see a few signs of that stabilization. But it obviously has a ways to go, so I think folks can expect that this will be important into next year. This is definitely going to color our economic lives.