December 6, 2022

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Powell decided to raise interest rates by half a percentage point

Powell decided to raise interest rates by half a percentage point

Federal Reserve officials suggested that the central bank may raise the benchmark interest rate by half a percentage point at the May 3-4 meeting of the Federal Open Market Committee.

Many Fed officials believe that tougher measures now will help the central bank tame excess levels of demand, even as some observers worry that the labor market may suffer and a recession may occur.

While a group of central bankers has expressed support for a move half a percentage point higher, even the most hawkish Fed officials do not see the need for a rate hike greater than that.

Below is a summary of recent comments from central bank governors.

Chairman Jerome Powell (April 21 International Monetary Fund Committee)

“It’s appropriate in my view to move a little bit more quickly, and I also think there’s something in the idea of ​​forward-loading wherever one sees fit, so that trend points to 50 basis points on the table. Sure, we’re making those decisions in the meeting, and we’re going to make them You meet at the meeting, but I would say 50 basis points will be on the table at the May meeting.”

Governor Lyle Brainard (April 12th interview (Wall Street Journal)

“In terms of exactly the correct pace for the set of policy rate increases from one meeting to the next, I don’t just want to focus on that, but I would just say that the combined effect will bring the policy position to a more neutral position expeditiously later this year.”

Governor Christopher Waller (April 13, CNBC)

“I prefer the front-loading approach, so a 50bp lift in May would be consistent with that, and maybe more in June and July.”

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Federal Reserve Bank of New York President John Williams (April 14, Bloomberg TV)

A May rate hike of 50 basis points is “a very reasonable option…from a monetary policy point of view, it makes sense for us to move quickly toward more normal levels for the federal funds rate.”

Cleveland Federal Reserve Chairman Loretta Mester (April 22, CNBC)

“I would support at this point, given the state of the economy, a 50 basis point rise in May and a little more to get to that second and a half percentage point.[point] level by the end of the year.

St. Louis Federal Reserve Chairman James Bullard (April 18 default appearance)

“We have not lost all hope here. I think we are in a position where we can maintain credibility and bring down inflation,” but when it comes to a 75 basis point rate hike in May, that action is “not my base case.”

Kansas City Fed President Esther George (March 30 virtual appearance)

“Given the state of the economy, with inflation at a 40-year high and unemployment near record lows, moving quickly to a policy-neutral stance is appropriate.”

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