A man walks past the US Federal Reserve in Washington, DC, on March 16, 2022. (PHOTO / XINHUA)
WASHINGTON – It is appropriate for the US Federal Reserve to "move a little more quickly" amid surging inflation and accommodative monetary condition, Fed Chair Jerome Powell said Thursday, signaling a 50-basis-point rate hike for the May meeting.
"Our goal is to use our tools to get demand and supply back in sync, so that inflation moves down and do so without a slowdown that amounts to a recession," Powell said in a panel discussion during the 2022 Spring Meetings of the International Monetary Fund and the World Bank.
When asked whether it's reasonable for market to price in three 50-basis-point hikes, the Fed chair refrained from commenting on specific market pricing, while noting that at the March meeting, many on the Federal Open Market Committee thought it would be appropriate to have one or more 50-basis-point rate hikes
"I don't think you'll hear anyone at the Fed say that that's going to be straightforward or easy. It's going to be very challenging," he said.
When asked whether it's reasonable for market to price in three 50-basis-point hikes, the Fed chair refrained from commenting on specific market pricing, while noting that at the March meeting, many on the Federal Open Market Committee, the Fed's policy-setting body, thought it would be appropriate to have one or more 50-basis-point rate hikes.
"We really are committed to using our tools to get 2 percent inflation back," Powell said. His remarks came a week after the US Labor Department reported that US consumer inflation in March continued to rise at the fastest annual pace in four decades.
READ MORE: US March inflation surges 8.5%, hitting fresh four-decade high
The March consumer price index surged 8.5 percent from a year earlier, the largest 12-month increase since the period ending December 1981. That compared with a 7.9 percent year-on-year gain in February, the data showed.
At the Spring Meetings event, the Fed chair noted that US inflation was a little over 3 percent in the last tightening cycle, which was a two year strain of 25-basis-point hikes from 2004 to 2006.
"So inflation is much higher now, and our policy rate is still more accommodated than it was then. So it is appropriate in my view of to be moving a little more quickly," said Powell.
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"I also think there's something in the idea of front-end loading whatever accommodation one thinks is appropriate," he said.
"Certainly we make these decisions at the meeting and we'll make it meeting by meeting, but I would say that 50 basis points (rate hike) will be on the table for the May meeting."
According to the CME Group's Fedwatch tool, investors are betting a 99.8 percent probability of a 50-basis-point rate hike at the Fed's May meeting, up from 63.9 percent a month ago.