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The Fed: Fed’s Evans says half-point rate hike in May could now be ‘highly likely’

A half-percentage-point hike in the Federal Reserve’s benchmark interest rate could now be “highly likely,” Chicago Fed President Charles Evans said Monday.

Previously, Evans had said he was open to considering a half-point move as part of his preferred pat to get the Fed funds rate to “neutral” by next March. Evans said he thinks a “neutral” Fed funds rate that doesn’t boost inflation is in a range between 2.25%- 2.5%.

On Monday, Evans said it would not be much different for the economy if the Fed accelerated the move to neutral so that it was reached by December.

“The next meeting is part of how you get there and how quickly you get there. 50 (basis points) is obviously worthy of consideration, perhaps it’s highly likely even, if you want to get to neutral by December.

Last month, the Fed took the first step, raising the Fed funds rate to 0.25%- 0.5% and signaled it intends to continue to move the rate higher.

‘You’re not going to get [to neutral] if you just do 25 at each meeting,” he said. The Fed has seven meetings left this year. The next is May 3-4.

Stocks
DJIA,
-0.64%

SPX,
-1.21%

were lower on Monday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
2.772%

continued to move higher, with the 10-year above 2.75%. 

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