Two Federal Reserve officials said they would have supported raising interest rates by a half percentage point at the central bank’s meeting earlier this month given the strength of economic demand and inflation.

Fed officials unanimously approved an increase in its benchmark federal-funds rate of a quarter point, or 25 basis points, to a range between 4.5% and 4.75%, at the conclusion of their most recent policy meeting on Feb. 1.

“I saw a compelling economic case for keeping the pace at 50 [basis points] at that meeting. I didn’t see a change in my outlook, that the funds rate would have to go above 5%,” Cleveland Fed President Loretta Mester told reporters after a speech Thursday. (Continue Reading – WSJ)

The Australian central bank’s monthly meetings give it flexibility to respond quickly in the event interest rates are pushed too high or are not high enough, Governor Philip Lowe said, while adding his current assessment is that more work needs to be done.

“The RBA and many other central banks are managing two risks,” the Reserve Bank chief said in opening remarks at his second session of parliamentary testimony on Friday. “One is the risk of not doing enough, which would result in high inflation persisting and then later proving very costly to get down. The other is the risk that we move too fast, or too far.” (Continue Reading – Bloomberg)

With under five months until the June 30 end-date for the publication of the London Interbank Offered Rate, around 80% of institutional loans and collateralized debt obligations (CLOs) - securities backed by pools of debt - are still tied to the tarnished rate, according to private equity firm KKR & Co Inc, which is a lender, a borrower, and an investor in CLOs.

"The shot clock is on," said Tal Reback, who leads KKR's global Libor transition efforts.

The Libor transition began in 2017 and had been smooth until 2022, when rising interest rates, decades-high inflation, Russia's war on Ukraine and recessionary fears rocked markets.

With opportunistic deals shelved, many issuers were prevented from tapping the markets, which is when they would normally revisit existing debt and potentially convert it to another rate, slowing the transition. (Continue Reading – Reuters)