MNI BRIEF: Fed May Hike 50BPs In May, Top Neutral Next Yr-Daly

The Federal Reserve may hike interest rates half a percentage point at its next meeting in May on its way to going above a 2.5% neutral interest rate in 2023, San Francisco President Mary Daly said Wednesday.

Economic data will determine what's needed at the next meeting, which could also include moves to slim down the balance sheet, she said at the Bloomberg Equality Summit. “I have everything on the table right now. If we need to do 50, that’s what we’ll do,” she said. “Some increase in the policy rate above neutral is likely to be required, but that's down the road in 2023," she said.

While the Fed must be careful not to "slam on the brakes," the odds of a U.S. recession are "very limited" and “it’s too early to call that we’re going to have a global recession" because of setbacks such as the Ukraine invasion, she said.