Powell says taming inflation 'absolutely essential,' and a 50 basis point hike possible for May

cnbc.com:

Federal Reserve Chairman Jerome Powell affirmed the central bank's determination to bring down inflation and said Thursday that aggressive rate hikes are possible as soon as next month.

«It is appropriate in my view to be moving a little more quickly» to raise interest rates, Powell said while part of an International Monetary Fund panel. «I also think there is something to be said for front-end loading any accommodation one thinks is appropriate.… I would say 50 basis points will be on the table for the May meeting.»

Powell's statements essentially meet market expectations that the Fed will depart from its usual 25-basis-point hikes and move more quickly to tame inflation running at its fastest pace in more than 40 years. A basis point equals 0.01 percentage points.

At its March meeting, the Fed approved a 25-basis-point move, but officials in recent days have said they see a need to move more quickly with consumer inflation running at an annual pace of 8.5%.

Market pricing points to a succession of 50-basis-point increases that ultimately will take the Fed's benchmark overnight borrowing rate to about 2.5% by the end of 2022.

«Our goal is to use our tools to get demand and supply back in synch, so that inflation moves down and does so without a slowdown that amounts to a recession,» Powell said. «I don't think you'll hear anyone at the Fed say that that's going to be straightforward or easy. It's going to be very challenging. We're going to do our best to accomplish that.»

«It's absolutely essential to restore price stability,» he added. «Economies don't work without price stability.»

The Fed had resisted raising rates through 2021 even though inflation was running well above the central bank's 2% longer-run target.