The Fed Should Hike Interest Rates by 150 Basis Points, Says Wells Fargo Strategist

Photo from Wells Fargo Newsroom

The Federal Reserve should hike interest rates by 150 basis points — even if that could spark “carnage” in stocks, a top Wells Fargo strategist has said.

Economists expect the US central bank to announce another jumbo rate hike of 75 basis points at the conclusion of its two-day meeting later Wednesday.

“The Fed knows what the destination is. It’s got the funds rate now, the upper bound is 2.5%,” the Wells Fargo Securities’ head of macro strategy said on “Fast Money”. 

“Very likely it gets to 4%-plus this year,” he added

“Why not just rip off the Band-Aid — let’s get there in one day.”

The central bank has raised interest rates by 75 basis points at its two previous consecutive meetings, in an effort to curb inflation running near 40-year highs

Schumacher acknowledged a 150 basis point hike is unlikely because of the shock it would deliver to markets. Stocks have sagged, with the S&P 500 down 19.3% year-to-date, as investors assessed whether the Fed’s aggressive tightening could tip the US into a recession.