Powell (Fed): A half-point rate hike “on the table” in May

by Howard Schneider and Ann Saphir

WASHINGTON, April 21 (Reuters) – A 50 basis point interest rate hike will be “on the table” when the U.S. Federal Reserve (Fed) meets its monetary policy committee on May 3-4, its chief executive said on Thursday. Chairman, Jerome Powell, hinting at a more aggressive set of actions from the central bank.

With inflation nearly three times higher than the Fed’s 2% target, “it’s appropriate to move a little faster,” he said during a debate on the world economy organized by the International Monetary Fund (IMF).

“50 basis points will be on the table for the May meeting,” he added.

In what should be his last public address before the next Fed meeting, Jerome Powell also said that investors expecting a series of 50 basis point rate hikes “are reacting appropriately, overall”. , to the measures taken by the central bank to counter galloping inflation.

The comments appear to validate a more aggressive approach by the Fed than envisioned at the March monetary policy meeting, as the central bank also begins to shrink its balance sheet – a move that will further complicate credit conditions for businesses. and individuals.

“We are really committed to using our tools” to control inflation, said Jerome Powell, who acknowledged that the Fed’s hope of seeing the rise in prices subside during the post-health crisis deconfinement was until vain there.

Now, he said, the Fed will rely on a tightening of its monetary policy to control demand for goods and services, while pushing companies to scale back their recruitment efforts which have caused a “unsustainable” increase in wages. (Report Howard Schneider; French version Laetitia Volga, edited by Jean Terzian)