The U.S. central bank’s San Francisco branch president, Mary Daly, said there were growing reasons for the Fed to raise interest rates by half a percentage point at its next policy meeting in May, the latest sign the central bank is ready to take aggressive action to eradicate it. high inflation.

Daly joins a growing number of Fed officials who have abandoned the approach of tapering support for the central bank. economy After the pandemic-induced recession. They accepted a faster exit as the labor market rebounded and price pressures became far-reaching.

Support has combined In recent weeks, interest rates will rise to a “neutral” level that neither helps nor constrain economic growth, and reach that level faster than initially expected with a larger 25 basis point hike post March. That requires repurposing a tool used more than two decades ago and raising rates by half a percentage point at one or more meetings this year.

“Barring any negative surprises between now and the next meeting, the 50 has increased,” Daly told the Financial Times on Friday. “I am more confident that these early adjustments are appropriate. of.”

Daly estimated the neutral policy rate at between 2.3% and 2.5% and advocated for it to be “effectively” reached this year, acknowledging that, given the target range of 0.25%, that would mean “many” half-point adjustments. points and 0.50%.

Wall Street economists have raised their rate forecasts after signals from some of the FOMC’s most senior policymakers — including Chairman Jay Powell — in recent weeks. They now expect the central bank to take half-percentage-point moves in May and June, before cutting rates by 25 percentage points at the next four meetings.

Citigroup believes the Fed could even raise rates by half a percentage point at its next four meetings, taking cues from several officials. endorsement Pushing rates above neutral this year. Most economists expect the Fed to begin shrinking its $9 trillion balance sheet next month.

Daley’s comment comes after another strong work report This showed that 431,000 jobs were added in March and the unemployment rate fell to its lowest level before the pandemic, to 3.6%.

Daly said the latest data reinforces the view that the labor market is “very strong” and “tightened to unsustainable levels.”

“If you want to get a job in the U.S., you can get one, and you’re probably going to get multiple jobs right now,” she said. “If you’re an employer looking for workers, it’s a matter of both hiring them and keeping them. It’s difficult to live with them.”

While the combination of no “soft” labor market and inflation running at the fastest pace in 40 years justifies a move towards neutrality, Daly said the Fed will be cautious to avoid “unrestricted” financial markets destabilizing. forced errors” or the wider economy.

So far, Fed officials appear confident in their ability to curb demand and contain inflation without causing widespread job losses or a recession.Powell optimistic about making it happen soft landing In his last public appearance last month.

Daly acknowledged that the economy may need to slow sharply to bring inflation back to the central bank’s 2 percent target. But she made a distinction between the 1970s, when then-Chairman Paul Volcker’s efforts to rein in soaring prices and cap inflation expectations led to a sharp economic contraction.

“Our job is really to bring demand and supply back into balance, which is easier than trying to reset the inflation anchor to something more consistent with price stability,” she said.

“I’m very optimistic that we can avoid a hard landing.”