Fed's Waller sees likelihood of multiple half-point interest rate hikes ahead

cnbc.com:

Getting inflation under control will require raising interest rates at a faster pace than normal even though the pace of price increases probably has peaked, Federal Reserve Governor Christopher Waller said Wednesday.

That means the central bank likely will hike short-term rates by half a percentage point, or 50 basis points, at its meeting in May, and possibly follow it up with similar moves in the next several months, Waller told CNBC. The Fed normally increases in 25-basis-point increments.

«I think the data has come in exactly to support that step of policy action if the committee chooses to do so, and gives us the basis for doing it,» he said during a live "Closing Bell" interview with CNBC's Sara Eisen. «I prefer a front-loading approach, so a 50-basis-point hike in May would be consistent with that, and possibly more in June and July.»

Markets already have almost fully priced that level of increase at next month's Federal Open Market Committee meeting, as well as the following session in June, according to CME Group data that tracks moves in the fed funds futures market. Pricing for July also is tilting that way, with a 56.5% probability of another 50-basis-point hike.

That means that should the Fed choose to move aggressively, it won't come as a surprise.

Waller said he thinks the central bank can pull off the tighter policy now because the economy is strong enough to support higher rates. The Fed is looking to raise rates to stave off inflation running at its highest levels in more than 40 years.

«I think we're going to deal with inflation. We've laid out our plans,» he said. «We're in a position where the economy's strong, so this is a good time to do aggressive actions because the economy can take it.»

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