The decision will be decided on Tuesday by the Federal Reserve Bank of New York president John Williams, with the decision being determined by economic data, Federal Reserve Bank of New York President 50 basis points or 75 basis points.
In our next meeting, I think 50 to 75 is going to be the debate, Williams said in an interview with CNBC. My view is that we have to get interest rates higher, and we have to do that expeditiously. The policy maker said he supports raising the Fed's benchmark interest rate to a range of 3% to 3.5% by later this year, and that the path for 2023 will depend on the data, though current bets in financial markets for rates that are around 3.5% to 4% next year is a perfectly reasonable projection. Fed officials have been pushing for more aggressive rate increases as they fight the hottest inflation in 40 years, after criticism that they left monetary policy too easy for too long as the economy rebounded from the Pandemic.
The Fed raised its benchmark interest rate by 75 basis points earlier this month -- the biggest increase since 1994 -- to a range of 1.5% to 1.75%. After the meeting, Chair Jerome Powell told reporters that officials could consider another 75 basis-point increase, or a 50 basis-point hike, when they meet next month. Powell will speak on Wednesday at the European Central Bank's annual policy forum in Sintra, Portugal.
Some policy makers, including Fed Governor Michelle Bowman and Governor Christopher Waller, have backed a 75 basis-point hike at their July 26 -- 27 meeting. Minneapolis Fed President Neel Kashkari and Chicago's Charles Evans said it would be reasonable to consider another increase of that size, and San Francisco s Mary Daly said it was a good place to start the debate.
Consumer prices went up 8.6% last month from a year ago, according to the Labor Department. The CPI report for June will be published on July 13 before the Fed holds its next meeting.
We need to get the funds rate up to between 3% and 3.5% later this year. That is something I have a lot of confidence in, Williams said. That's going to depend on the data next year - 3.5% to 4% is a good starting point to think about next year. The New York Fed chief said he expects economic growth to cool and the unemployment rate to rise as the Fed hikes borrowing costs to tame inflation, but he doesn't project a recession.
He said that he believes growth will slow this year, rather than what we had last year, and actually slow to maybe 1% to 1.5% GDP growth this year, based on the 1% -- 2% range of their quarterly growth estimates.
It is a slowdown that we need to see in the economy to reduce the inflation pressures that we have. If you're too old for an internship, try a returnship instead.