A 50-bps rate hike at the next FOMC meeting is on the cards

The U.S. central bank raised rates by 25 basis points this week, but it should consider being more aggressive at its next meetings, says Fed Governor Christopher Waller.

Waller’s year-end target for interest rate

According to Waller, the Federal Reserve should aim to bring interest rate back to 2.50% by the end of the year. On CNBC’s “Squawk Box”, he said:

I favour front loading our rate hikes. We need to do more withdrawal of accommodation now to have an impact on inflation later this year. The way to do it is to pull some rate hikes forward which would imply 50 bps increase at one or multiple meetings in the near future.

Waller reiterated that the U.S. economy is not directly exposed to the Ukraine war, and is strong enough to withstand the current macroeconomic backdrop.

Bullard is calling for twelve rate hikes this year

Who wants the central bank to be even more hawkish is St. Louis Fed President James Bullard. He’s now calling for twelve rate hikes this year to address inflation that climbed to a new 40-year high in February.

Bullard wants the Federal Reserve to aim for a 300 basis points increase (at least) in the interest rate this year. He was the only one who voted for a 50-bps hike in March.

In comparison, Chair Jerome Powell signalled six more hikes this year. The S&P 500 index has recovered nearly 4.0% since the FOMC meeting on Wednesday.