Fed Governor Christopher Waller said in a speech that his preference is to “increase the target range 100 basis points by the middle of this year… Â appropriate interest rate policy brings the target range up to 1 to 1.25 percent early in the summer.” That would be “a bit below” pre-pandemic level when inflation was “considerably lower” and Fed’s balance sheet less than halved.
Nevertheless, he added, “of course, it is possible that the state of the world will be different in the wake of the Ukraine attack, and that may mean that a more modest tightening is appropriate.”
“I will continue to monitor the geopolitical situation to assess the appropriate timing of this near-term monetary policy tightening,” Waller said. “These actions will get us into the second half of the year, when we will have six months of inflation data, and we can assess what the appropriate path will be for the rest of 2022.”
