Fed governor supports rate hike of 75 basis points; open to higher increase

ANKARA

US Federal Reserve Governor Christopher Waller said Thursday he supports another interest rate hike of 75 basis points later this month but added he is open to a higher increase.

"I support another 75-basis point increase, bringing the target range for the federal funds rate to 2.25% to 2.5% before August," Waller said at the Rocky Mountain Economic Summit Global Interdependence Center in Victor, Idaho.

"I judge that level is close to neutral, by which I mean a level that neither stimulates nor restricts demand, assuming that the economy is growing moderately and unemployment is roughly where it is now," he said.

The Fed increased its benchmark interest rate by 150 basis points since March to tame record inflation. It made a rate hike of 75 basis points June 15, the steepest in 28 years.

Annual consumer inflation rose 9.1% in June, while producer prices increased 11.3% last month on an annual basis.

The recent climb in inflation figures has triggered worries that the Fed could make a rate hike of 100 basis points at the conclusion of its two-day meeting on July 27.

The probability of that stood at 41% at 3.30 p.m. EDT Thursday, according to the FedWatch Tool provided by US-based global markets company Chicago Mercantile Exchange (CME) Group.

"We have important data releases on retail sales and housing coming in before the July meeting. If that data come in materially stronger than expected it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down," said Waller.

"I think we need to move swiftly and decisively to get inflation falling in a sustained way, and then consider what further tightening will be needed to achieve our dual mandate," he added.