St. Louis Fed President James Bullard, who has been a leading spokesman for aggressive rate hikes this year, said Wednesday he was content with a rate hike plan of interest of 50 basis points at each of the next two meetings.
“We have a plan in place, which is 50 basis points at the last [May 4] meeting and in future meetings as well,” Bullard said in an interview. on Yahoo Finance.
“I think it’s a good benchmark at the moment,” he said.
Lily: Dissection of recent Fed speeches reveals broad agreement on next two rate hikes
Bullard said he would like to see the Fed’s key rate rise to 3.5% by the end of the year. The Fed must go above “neutral” to bring inflation down, he said.
Last week, the Fed raised rates by 50 basis points, the biggest increase in 20 years, pushing its key rate to a range of 0.75% to 1%.
Bullard’s comments in late April that the Fed should not take an even bigger 75 basis point rate hike off the table rattled financial markets.
Asked if a 75 basis point hike could be justified on the road, Bullard said Wednesday it was “not my base case.”
“The committee, based on public comments from my colleagues, has coalesced around a plan of 50 basis points per meeting. So I think we can continue on that,” he said.
April’s CPI report was “hot” in terms of inflation but was not that different from what was expected, the St. Louis Fed chairman said.
“It’s not like we have a massive amount of information here, although I would interpret that to mean that inflation is broader and more persistent than many thought,” he said.
Some Fed watchers believe a 75 basis point hike could occur later this year.
Lily: Bigger Fed hikes could be on the table
Other economists think the Fed could downgrade this fall to more standard moves of 25 basis points.
Stocks fell on Wednesday, with the Dow Industrial Average DJIA,
down for the fifth consecutive session. The yield of the 10-year Treasury note TMUBMUSD10Y,
dropped below 3%.