Powell will raise interest rates by half a percentage point

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

Aggressive action now would help the central bank tame excess demand, many Fed officials believe, although some observers fear the labor market could suffer and a recession could take place.

While a number of central bankers have expressed support for a half-percentage-point hike, even the most hawkish Fed officials see no need for a rate hike beyond that.

Here is a summary of recent comments from central bankers.

Chairman Jerome Powell (International Monetary Fund panel of April 21)

“In my view, trading a little faster is appropriate, and I also think there is something about the idea of ​​making whatever adjustments you think is appropriate up front, which is pointing towards 50 basis points on the table. Of course we are making these decisions at the meeting and we will be making them meeting by meeting but I would say 50 basis points will be on the table for the May meeting.”

Governor Lael Brainard (WSJ interview from April 12)

“Regarding the exact pace of this series of session-to-session hikes in interest rates, not only do I want to focus on that, I would just say that the combined effect will see the policy stance change to a more neutral stance swiftly later this year .”

Governor Christopher Waller (April 13, CNBC)

“I prefer a frontloading approach, so a 50 basis point hike in May would be consistent with that, and possibly more in June and July.”

New York Fed President John Williams (April 14, Bloomberg Television)

A 50 basis point rate hike in May is “a very sensible option… From a monetary policy perspective, it makes sense that we move swiftly towards more normal levels in the policy rate”.

Cleveland Fed President Loretta Mester (April 22, CNBC)

“At this point, I would support a 50 basis point rise in May given the state of the economy and a few more to reach that 2.5 percent.[point] level by the end of the year.”

St. Louis Fed President James Bullard (Virtual appearance on April 18th)

“All hope is not lost here. I think we’re in a position where we can maintain our credibility and bring inflation down,” but when it comes to a 75 basis point rate hike in May, that move is “not my base case.”

Kansas City Fed President Esther George (Virtual appearance on March 30th)

“Given the economic climate, with inflation at a 40-year high and unemployment near a record low, it is appropriate to move swiftly to neutral policy.”

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