[ad_1]
Cleveland Fed President Loretta Mester said Friday that she didn’t want to “shock” the economy with an interest-rate hike of 75 basis points at the Fed’s next meeting in May.
“I favor a more methodical approach rather than a shock of a 75-basis point. I don’t think it’s needed with what we’re trying to do, with our policy,” Mester said in an interview on CNBC.
U.S. stocks recovered a little ground after Mester’s comments but then sank deeper into the close. The Dow Jones Industrial Average
DJIA,
ended down 981 points in worst day since 2020. The S&P 500 index
SPX,
had its biggest one-day loss since March 7.
Asked if the ugly day on Wall Street on Friday was part of the Fed’s plan to create tighter financial conditions, Mester replied: “Well, yes, but not necessarily all at once.”
The Fed is committed to get inflation under control, Mester said.
The Cleveland Fed president, who is a voting member of the Fed’s interest-rate committee this year, said she wanted to get the Fed’s benchmark rate up to around 2.5% by the end of the year.
She backed a 50-basis point move in May and “a few more” to get rates up to her desired 2.5% level by year-end. She said she favored “front-loading” these hikes, which points to bigger moves in June and July than later in the year.
On Thursday, Fed Chairman Jerome Powell backed moving quickly to raise rates. This has cemented expectations of a 50-basis point move in May.
St. Louis Fed President James Bullard said earlier this week that a 75-basis point hike could be an option if needed.
[ad_2]
Source link
