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St. Louis Fed President James Bullard, who has been a leading voice of aggressive rate hikes this year, on Wednesday said he was content with a plan to raise interest rates by 50 basis points at each of the next two meetings.
“We’ve got a plan in place, which is 50 basis points at the last [May 4] meeting and at future meetings as well,” Bullard said, in an interview on Yahoo Finance.
“I think that is a good benchmark for now,” he said.
Read: Dissecting recent Fed speak sees broad agreement on next two rate hikes
Bullard said he would like to see the Fed’s policy rate get up to 3.5% by the end of the year. The Fed has to go above “neutral” to push down inflation, he said.
Last week, the Fed hiked rates by 50 basis points, the largest increase in 20 years, pushing up its policy rate to a range of 0.75%-1%.
Bullard’s comments in late April that the Fed shouldn’t take an even larger, 75-basis-point rate hike off the table roiled financial markets.
Asked if a 75-basis-point hike could be warranted down the road, Bullard said Wednesday it was “not my base case.”
“The committee, based on public comments from my colleagues, has coalesced around a plan of 50-basis-points per meeting. So I think we can proceed on that,” he said.
The April CPI report was “hot” in terms of inflation but was not that different from what was expected, the St. Louis Fed president said.
“It’s not like we got a tremendous amount of information here, although I would interpret it as indicating that inflation is broader and more persistent than many had thought,” he said.
Some Fed watchers think that a 75-basis-point hike could happen later this year.
Read: Larger Fed hikes could be on the table
Other economists think the Fed may downshift this fall to more standard 25-basis-point moves.
Stocks fell on Wednesday, with the Dow Industrial Average
DJIA,
down for the fifth straight session. The yield on the 10-year Treasury note
TMUBMUSD10Y,
slipped below 3%.
