WASHINGTON, May 9 (Reuters) – The U.S. Federal Reserve (Fed) may stick to half-point increases in its interest rates at its next two or three monetary policy meetings and then assess their effect on the economy and inflation before deciding whether further hikes are needed, Atlanta branch president Raphael Bostic said Monday.
Raising the federal funds rate band by 50 basis points (“fed funds”), raised between 0.75% and 1% last week nL5N2WW77G, “is already a rather aggressive move”, he said. told Bloomberg. “I don’t think we need to move even more aggressively,” he added, appearing to rule out a 75 basis point hike as expected by the markets.
“I think we can stay on that beat and pace and really watch how the markets move…” he continued.
“We’re going to move, maybe twice, maybe three, watch how the economy reacts, see if inflation continues to move closer to our 2% target, then we can pause and assess the situation.”
Fed Chairman Jerome Powell said Wednesday that three-quarter point rate hikes were not “actively” being considered by members of the Federal Open Market Committee (FOMC). nL5N2WW7CO
Many investors and economists believe, however, that the Fed will have no choice but to raise rates more sharply given the current level of inflation.
US consumer price data for April will be released on Wednesday.
Raphael Bostic said he remains hopeful that some of the elements fueling inflation, such as tensions in supply chains, will gradually fade.
(Report Howard Schneider; French version Claude Chendjou, edited by Bertrand Boucey)