Richmond Fed President Tomas Barkin said on Wednesday that he would be open to a 50 bps rate hike in May if necessary and that he will be looking at inflation and how strong the economy is, according to an interview on Bloomberg TV. The war in Ukraine has added to inflationary pressures, he noted, caveating but has not impacted US demand. Indeed, there is still a tonne of excess demand for labour, he continued, noting that it feels like inflation will settle next year as the Fed's tightening actions take effect, excess consumer savings are spent and supply chain snags ease. Underlying demand in the economy remains strong, Barkin said.
At the same time as Barkin was giving his remarks, Fox reporter Charles Gasparino said that trading sources had told him that the robust core PCE reading (for Q4 2021) on Wednesday had pretty much locked in a 50 bps rate hike at the coming meeting. Gasparino said that some traders thought the Fed might move to lift rates on an intra-meeting basis, but other sources had told him that this was an unlikely move.
BREAKING: Trading sources tell @FoxBusiness robust core PCE (personal consumption expenditure) gauge Wednesday pretty much locks in a 50 basis point raise at May meeting. Some traders think @federalreserve could move intra meeting, but my Powell watcher sources say thats unlikely— Charles Gasparino (@CGasparino) March 30, 2022