Cleveland Fed president Loretta Mester is speaking and says:
- I would like to frontload some of our interest rate hikes
- better to do that earlier rather than later
- frontloading better positions policy for however the US economy evolves
- I don't have concerns on beginning to reduce balance sheet, and raise rates at the same meeting
- I think we are going to need to do some 50 basis point moves this year
- markets can handle such a move, we need to get on with the process
- we need to get inflation under control
- we need to be more aggressive earlier rather than later
- we will need to bring interest rates up this year and next to tame inflation
- some wage increases we are seeing are outstripping from captivity growth
- it is going to take some deliberate policy action on our part to bring inflation down
- I was supportive of 25 basis points at last meeting because it was coupled with ongoing rate increases
It was one week ago today that the Federal Reserve met and raised rates by 25 basis points. They saw rates going up seven times in 2022 to 1.90%.
Since that time, the Fed officials are lining up for multiple 50 basis point hikes in May and June (at least). Note Mester uses the word "some" implying more than one (how many is some?)
Goldman Sachs on Sunday raised their estimate for hikes for the remainder the year. They now see 50 basis points at the May and June meeting, and 25 basis points at the 4 additional meetings in 2022 (for a total of 200 basis points more or 225 basis points for the year).
That would bring the rate near what many perceive as the neutral rate. That will still be below the the projected inflation rate of 4.3% (as per the Fed's central tendencies).