Fed’s Evans says May half-point rate hike could be ‘highly likely’


A half-percentage-point hike in the Federal Reserve’s benchmark interest rate could now be “very likely,” Chicago Fed President Charles Evans said Monday.

Previously, Evans had said he was willing to consider a half-point move as part of his preferred strategy to bring the fed funds rate to “neutral” by next March. Evans said he thinks a “neutral” federal funds rate that doesn’t boost inflation is somewhere between 2.25% and 2.5%.

On Monday, Evans said it wouldn’t be much different for the economy if the Fed accelerated the shift to neutral so it would be reached in December.

“The next meeting is part of how you get there and how quickly you get there. 50 (basis points) is obviously worthy of consideration, maybe even very likely, if you want to hit neutral here December.

Last month, the Fed took the first step by raising the federal funds rate to 0.25%-0.5% and signaled that it intended to continue raising the rate.

‘You won’t get [to neutral] if you do 25 in every meeting,” he said. There are seven meetings left at the Fed this year. The next one will take place on May 3 and 4.

DJIA Stocks,

were lower on Monday while the yield on the 10-year Treasury note TMUBMUSD10Y,
continued to rise, with the 10-year above 2.75%.


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