Fed/Williams: A 50 basis point rate hike is a reasonable option

In an interview with Bloomberg Television, Williams stated that a 50 basis point increase may occur in a high inflation environment and said, "I think this is a reasonable option. We need to bring the policy to neutral levels."

Williams stated that they should focus on reducing inflation to the 2 percent target, and that would be their priority. Asked whether the Fed is likely to put the economy into a recession, he replied, "I think the economy can handle real interest rates being at or slightly above neutral."

The US Federal Reserve increased its policy rate by 25 basis points last month. This was the first rate hike since 2018. Due to inflation, which is at its peak in 40 years, the bank is expected to continue to increase interest rates. At the meeting on May 3-4, the expectations for an increase of 50 basis points in the markets are also increasing.

US inflation rose 8.5 percent in March, the biggest increase since 1981.