Fed’s Williams open to bigger rate hike if high inflation continues

© . FILE PHOTO: John Williams, chief executive officer of the Federal Reserve Bank of New York, speaks at an event in New York, US, Nov. 6, 2019. REUTERS/Carlo Allegri By Lindsay (NYSE:) Dunsmuir () -The US Central bank may need to raise interest rates more aggressively to deal with high inflation, John Williams, president of the New York Federal Reserve, said Friday. Asked whether he would support a half percentage point hike in the Fed’s interest rate by half a percentage point at a policy meeting on May 3-4, Williams said the central bank will be guided by economic data between now and then. “Which is the right decision in a particular move depends on the situation then, but the simple answer to your question is whether it’s appropriate to raise interest rates by 50 basis points in a meeting, then I think we should do that.” Williams told a conference hosted by the Central Reserve Bank of Peru and the Bank of International Settlements. “If it’s appropriate to do 25, we should do that,” he said. Chief among what the New York Fed chief will be looking at is whether there is any easing of supply chain and labor supply issues as the COVID-19 pandemic subsides, as well as the impact on the economic prospects of Russia’s invasion of Ukraine. . “We have some questions that we don’t know the answers to yet… we have to be nimble and adapt as we go along,” Williams said. Several Federal Reserve officials, including Fed Chair Jerome Powell, expressed a renewed sense of urgency earlier this week in combating a price hike that has propelled inflation to 40-year highs, even amid uncertainty. on the economic impact of the war in Ukraine. † Williams also noted that low and stable inflation is critical to the success of the Fed’s goals of maximum employment and financial stability. Inflation, based on the Fed’s preferred measure, is currently above 6%, more than three times the flexible average target. Such talks have led to the mainstream belief that the Fed will raise its key rate by half a percentage point at its May meeting and that it could also begin reducing its balance sheet by nearly $9 trillion. Interest rate futures, which had priced in a key year-end rate of 2.25%-2.5%, now give an equal chance that yields will end the year even higher, at 2.5%-2.75%. To get there, the Fed would have to raise interest rates by half a percentage point on three of its next six meetings and a quarter of a percentage point on the other three meetings. The Fed’s current forecast would raise its benchmark overnight interest rate to nearly 2% this year with a view to rising nearly 3% next year, a level that would be intended to slow the economy and further cool price pressures . Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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