Last week, Fed policy makers unanimously agreed to raise interest rates by 50 basis points for the first time in 22 years. This week, senior Fed officials reiterated the appropriateness of aggressive rate increases, and senior officials refuted doubts that aggressive interest rate hikes by the Fed could trigger a recession.

Mestre: do not rule out a bigger interest rate hike, even if the unemployment rate may rise, there will be two more 50 basis point interest rate hikes.

On Tuesday, May 10, US Eastern time, Cleveland Fed Chairman Mestre, who has the right to vote on the Fed's monetary policy committee FOMC this year, said the Fed could not permanently rule out a 75 basis point rate hike, but she thought a relatively small 50 basis point rate hike was appropriate. "I think our current [rate hike] pace seems appropriate to me. After several times like that, we will be able to get more information. "

Mestre said she could not rule out any possibility in the second half of the year. If US inflation does not fall, the Fed may have to speed up interest rate hikes. She said:

Given the current inflation situation, I estimate that we will have to [keep interest rates] above the neutral level, but I cannot tell you exactly how much. We must see how the economy will perform in the second half of the year and into next year before we can answer this question.

Mestre stressed that the Fed "must keep inflation under control" and that inflation is "too high" and believes that even if unemployment picks up, it should insist on raising interest rates in order to curb inflation.

I think it makes a lot of sense to raise interest rates by 50 basis points in the next two meetings. It is likely that unemployment will have to rise slightly, and we may have another quarter of negative growth or a slowdown, but that must happen if we are to bring inflation down.

Mr Mestre does not believe that the Fed's two targets, 2 per cent inflation and full employment, cannot have both, because "if price stability is not restored, there will be no sustainable health of the labour market in the future."

The Fed raised interest rates by 50 basis points, as expected, after last Wednesday's meeting. At a press conference after the meeting, Federal Reserve Chairman Powell also reiterated that US inflation is too high, saying that the Fed is acting quickly to lower inflation, and that the next two meetings in June and July may each raise interest rates by 50 basis points. He also said that the FOMC did not actively consider the possibility of raising interest rates by 75 basis points, and was seen as temporarily ruling out the possibility of raising interest rates by 75 basis points.

However, on Friday, two days later, Barkin, chairman of the Richmond Fed, who had the right to vote in FOMC in 2024, said: "I hope to raise interest rates at a feasible rate, and I do not rule out the possibility of a single rate hike of 75 basis points in the future."

Barkin said that the reason for supporting a big rate hike is that demand is strong and inflation is high. He did not rule out any situation, but also said that the current pace of increase has accelerated.

Williams and Barkin: the Fed's lowering inflation will not lead to recession

Mestre spoke on the same day, earlier on Tuesday, New York Federal Reserve Chairman Williams, who is the "top three" of the Federal Reserve and has the permanent right to vote in FOMC, expressed his confidence in the Fed's soft landing.

Williams said that reducing inflation is now the Fed's main mission, and the US economy is expected to continue to be strong. He acknowledged that it would be difficult for the Fed to contain high inflation without letting tightening money hurt the economy, but added that it was not an "insurmountable" difficulty.

'The rapid withdrawal of easing gives the Fed some room to raise interest rates by 50 basis points in future meetings, 'Mr. Williams said, noting that the table would shrink at the same time. He believes that the Fed's shift from monetary easing to restrictive monetary policy will not lead to a recession in the United States.

The challenge for monetary policy today is clearly to reduce inflation while keeping the economy strong. I am confident that we have the right tools to achieve our goals.

Williams predicts that core inflation will be close to 4% this year and fall back to 2.5% next year, without significantly worsening unemployment and economic growth. Explaining why he made such a prediction, he said

In areas where we find the most imbalances and signs of overheating, such as durable goods and housing, our monetary policy tools are particularly powerful. Higher interest rates will reduce demand for these interest-rate-sensitive industries to a level more in line with supply. It would also cool the labour market and reduce the imbalance between vacant jobs and available labour.

Also on Tuesday, Richmond Fed Chairman Barkin predicted that the Fed's move to keep inflation under control would not trigger the recession of the 1980s when Volcker led the Fed. At present, the Fed's policy interest rate is 83 basis points, which is far from the level that limits economic growth, he said. The Fed raises interest rates to neutral levels and then determines whether to rise higher in response to the needs of the economy.

Williams' statement is in line with that of Powell.

At a news conference on Wednesday, Powell said that curbing inflation is the Fed's top priority and that the Fed will spare no effort to reduce inflation, while expressing confidence in the Fed that inflation can be curbed without triggering a recession. "there is no indication that the United States is close to or vulnerable to recession," he said, adding that "I think we have a good chance of achieving a soft landing."

However, according to Wall Street news articles on Friday, Williams's predecessor, former New York Fed Chairman Dudley, former Richmond Fed Chairman Lake and former Philadelphia Fed Chairman Plosser all expected the Fed to act late. there is a good chance of a recession in the United States. When the Fed announced in 2020 that it would not take action to curb inflation, it had already laid the scourge for the current situation.

On Friday, Clarida, who stepped down as vice chairman of the Federal Reserve in January, also said that the Fed should have started to curb inflation in September last year, and that because it did not act in time, the situation that the Fed may now face is to control prices at the expense of the recession.