Fed Deputy Chairman Richard Clarida hinted at a potential rate hike in his interview yesterday, saying that the central bank is likely to hit its economic targets by the end of next year, so interest rates could be increased around 2023.

The comment came just days after Fed Governor Christopher Waller said the central bank should begin scaling back bond purchases by October this year.

Following these, the yield on 10-year Treasuries rose more than 2 basis points, and gold plummeted by 2,500 pips.

Meanwhile, Fed Chairman Jerome Powell said the recovery in the US labor market is still far from what is needed to raise interest rates, but acknowledged that the central bank is watching inflation closely.

Inflation is already above the 2% target, but the workforce is still 6.8 million fewer than before the pandemic began.

Clarida said this gap will be filled by the end of 2022 and added that inflation will decline to more acceptable levels in the future.

In case inflation exceeds 3% this year, the Fed said it will consider it as a slight excess on the inflation target.