Bullard-Fed has a reason to raise rates
2022.11.28 13:23
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Bullard-Fed has a reason to raise rates
Budrigannews.com – According to St. Louis Fed President James Bullard on Monday, the Federal Reserve needs to raise interest rates significantly further and then maintain them at that level throughout the year 2024 in order to regain control of inflation and bring it back down to the 2% target set by the U.S. central bank.
Bullard reiterated his belief that the Fed’s target policy rate must rise to at least a range between 5.00% and 5.25% from the current level of 3.75%-4.00% in order to be “sufficiently restrictive” to reduce inflation in an interview with MarketWatch. “We’ve got a way to go to get restrictive,” Bullard said.
Given inflation’s past behavior, Bullard stated that rates would “have to stay there all through 2023 and into 2024” once they reached a sufficient level.
In an effort to curb inflation, the Federal Reserve has increased its policy rate by 375 basis points this year, the fastest rate since the early 1980s. Inflation is exceeding the Fed’s target by more than three times, according to the preferred measure used by the central bank.
Bullard stated, “We want to get this inflation under control much sooner than in the 1970s,” pointing out that he prefers to raise the policy rate quickly to set the stage for price pressures to subside over the next year.
However, Bullard also reiterated earlier this month’s assertion that he would defer to Fed Chair Jerome Powell when determining how much higher interest rates should be raised at upcoming policy meetings.
The majority of investors anticipate that the Federal Reserve will increase its policy rate by half a percentage point at its upcoming meeting on December 13 and 14.
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