Wall Street Veteran Says Fed Won’t Deploy 50-Basis-Point Rate Hike

(Bloomberg) -- Wall Street veteran Peter Kraus said the Federal Reserve will avoid a 50-basis-point increase in interest rates, even as markets gyrate over concerns about inflation and geopolitical conflict.

“It’s pretty clear: The Fed is going to increase interest rates by 25 basis points,” Kraus said Friday on Bloomberg Television. “They are not going to move by 50 basis points. That would just cause market instability. What is the point of that?”

Kraus’ comments come a day after Federal Reserve Bank of St. Louis President James Bullard voiced support for raising interest rates by a full percentage point by July 1.

Read more: Fed Doesn’t Yet Favor a Half-Point Hike or an Emergency Move

Kraus, who heads Aperture Investors and spent 22 years at Goldman Sachs Group Inc. before running AllianceBernstein Holding LP, said that a recession isn’t on the horizon. He said he sees potential for a Russian invasion of Ukraine to create short-term market volatility.

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