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Federal Reserve Chairman Jerome Powell said that the May meeting could raise interest rates by 50 basis points.
At an International Monetary Fund (IMF) panel discussion, Powell said, “I would say that 50 basis points will be on the table for the May meeting.”
The Federal Reserve will meet on May 3-4 to approve the next interest rate hike in a series of rate increases this year, to tighten the monetary policy to curb inflation.
US inflation soared to its highest level in more than 40 years, in March, after the consumer price index (CPI) jumped 8.5% compared to a year earlier.
In his remarks at the discussion, Powell backed the idea of the central bank hiking aggressively at the start of the tightening cycle.
“It is appropriate in my view to be moving a little more quickly. I also think there is something to be said for front-end loading any accommodation one thinks is appropriate,” he said.
Necessary pains
Powell stressed the need to restore price stability. “It’s essential to restore price stability. Economies don’t work without price stability,” he said.
“I don’t think you’ll hear anyone at the Fed say that that’s going to be straightforward. It’s going to be very challenging. We’re going to do our best to accomplish that,” he added.
The Fed Chair’s remarks sent markets tumbling down as Dow fell more than 400 points and the tech-heavy Nasdaq was lower by more than 2%. Treasury yields moved higher, with the benchmark 10-year note most recently at 2.9%.
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