San Francisco Fed President Mary Daly said she has “everything on the table” for the May FOMC meeting. “If we need to do 50, that is what we’ll do,” she added. “We’re prepared to do whatever it takes to ensure that we get price stability, which clearly no one thinks we have right now.”

Daly pointed to the new dot plot projection that interest rate will rise to 1.9% this year, and 2.8% by the end of next. “Relative to previous periods of tightening, this is quite a bit of front-loading just as the SEP (Summary of Economic Projections) has indicated.”

“I don’t think it’s appropriate to you, you know, really ratchet up so quickly, that we forget about the risks out there, but rather we be data dependent,” she said.

“We could get a lot of tightening in financial conditions globally and that is something we have to think about,” she said. “Some increase in the policy rate above neutral is likely to be required. That’s down the road in 2023. Right now I don’t think we need to be so decisional on what that looks like.”

Cleveland Fed President Loretta Mester reiterated yesterday that Fed should “front-load” interest rate hikes in the first of of the year, and start quantitative tightening at the same time. “We have to recognize that inflation is very elevated. It is well above our goal. We have to do what we can with both our policy tools to get inflation under control,” she emphasized.

“I think we’re going to need to do some 50 basis-point moves,” Mester added. “I don’t want to presuppose every meeting from here to July, but I do think we need to be more aggressive earlier rather than later.”

Cleveland Fed President Loretta Mester said in a speech yesterday, “in my view, inflation, which is at a 40-year high, is the number one challenge for the U.S. economy at this time.”

“Given the underlying strength in the economy and the current very low level of the funds rate, I find it appealing to front-load some of the needed increases earlier rather than later in the process because it puts policy in a better position to adjust if the economy evolves differently than expected,” she said.

Mester expects interest rate to be at around 2.50% by the end of 2022. That would require some 50bps hikes at the upcoming meetings.

San Francisco Fed President Mary Daly said in a virtual event yesterday, “even though we have these uncertainties around Ukraine, and we have the uncertainties around the pandemic, it’s still time to tighten policy in the United States.”

“Inflation has persisted for long enough that people are starting to wonder how long it will persist,” she said. “I’m already focused on let’s make sure this doesn’t get embedded and we see those longer-term inflation expectations drift up.”

“In addition to pushing up wage inflation, which could ultimately push up price inflation, putting us in sort of a vicious cycle,” she said, “it’s just not a very sustainable way to manage the economy.”