Fed’s Williams Says a Half-Point Hike on the Table If Needed

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© Bloomberg. John Williams, president of the Federal Reserve Bank of San Francisco, speaks during a Hutchins Center on Fiscal and Monetary Policy event at the Brookings Institution in Washington, D.C., U.S., on Monday, Jan. 8, 2018. The event was entitled Should the Fed Stick with the 2 Percent Inflation Target or Rethink It.
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(Bloomberg) — Federal Reserve Bank of New York President John Williams said the pace of interest-rate increases should be driven by the data, including tightening by a half percentage point if needed.

“If it’s appropriate to raise interest rates by 50 basis points at a meeting, then I would think that we should do that. If it’s appropriate to do 25, then we should do that,” Williams said Friday during a virtual panel hosted by the Central Reserve Bank of Peru and Bank for International Settlements. “I don’t see any reason not to do one or the other, it’s just we need to make the right decisions based on what we’re seeing in the economy.”

Williams comments come after Fed officials raised rates by a quarter point last week for the first time since 2018 and projected six more such hikes this year.

Investors have increased their bets on a half-percentage point hike at the Fed’s May 3-4 meeting after Chair Jerome Powell said on Monday the central bank was prepared to do so if needed to get inflation under control. 

Several central bankers have also voiced support for moving by a half point if needed, including St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester. Atlanta Fed President Raphael Bostic, however, said he favors a less aggressive approach this year due to uncertainty following Russia’s invasion of Ukraine, though he could be persuaded to go faster if needed.

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