“I think we’ll have to raise (rates) 50 basis points,” or half a percentage point, Cleveland Fed President Loretta Mester said.
The consensus seems to be growing among the leaders of the American central bank, for one or more sharp increases in key rates in 2022, following new comments to this effect from an official of the institution on Wednesday.
“I think we’ll have to raise (rates) 50 basis points,” or half a percentage point, Cleveland Fed President Loretta Mester told a press conference call.
She spoke of “several increases” of such magnitude.
The Fed, at the end of its last meeting on March 16, raised its rates for the first time since 2018 in order to combat inflation at its highest in 40 years, and had opted for the usual increase of a quarter of point.
“We are going to have to raise the key rates this year and next year to control inflation,” said Ms. Mester, saying that “the main current economic difficulty is inflation.”
And strong increases can be made, according to her, without penalizing employment or economic growth: “I am convinced that we can do what we intend to do, that is to say control inflation , while supporting the growth and health of the labor market”.
Several officials of the institution, including President Jerome Powell, have in recent days said they are ready to be more aggressive, perhaps even at the next meeting, on May 3 and 4.
The president of the Cleveland branch of the Fed clarified that she, however, voted last week for an initial increase of only a quarter of a point, “because we were starting from zero”, stressing that “it was a message important to send”.
