Fed’s George Says Hike Pace Under Debate; Bullard Backs Big Move
2022.08.18 22:22
Budrigannews.com – James Bullard, president and chief executive officer of the Federal Reserve Bank of St. Louis, gestures while speaking at the 2019 Monetary and Financial Policy Conference at Bloomberg’s European headquarters in London, U.K., on Tuesday, Oct. 15, 2019. Bullard said U.S. policy makers are facing too-low rates of inflation and the risk of a greater-than-expected slowdown, suggesting he’d favor an additional interest rate cut as insurance.
Kansas City Fed President Esther George said the US central bank had already “done a lot” on raising interest rates while her St. Louis colleague James Bullard backed another 75 basis-point move next month.
The Fed in July raised rates by three-quarters of a percentage point to a range of 2.25% to 2.5%, following a similar-sized hike at the June meeting, in an effort to cool price pressures that hit a 40-year high.
Bullard, one of the most hawkish policy makers at the US central bank, told the Wall Street Journal in an interview published Thursday that he backed another 75 basis-point increase in September, arguing “we should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation.”
Both Bullard and George are voters this year on the rate-setting Federal Open Market Committee, though George has sounded more dovish than Bullard in recent months after many years of being viewed as a hawk.
George backed the July hike but dissented in June in favor of a smaller half-point increase, citing concern the larger move could stoke policy uncertainty. Her remarks Thursday continued to tilt dovish.
“I think the case for continuing to raise rates remains strong. The question of how fast that has to happen is something my colleagues and I will continue to debate, but I think the direction is pretty clear,” she said in Independence, Missouri, on Thursday.
“We have done a lot, and I think we have to be very mindful that our policy decisions often operate on a lag. We have to watch carefully how that’s coming through.”
Policy makers saw the federal funds rate reaching a range of 3.25% to 3.5% this year, according to the median estimate of their June projections. The forecasts will be updated in September when the Fed next meets.
Earlier on Thursday, San Francisco Fed President Mary Daly told CNN International that she was open to raising rates by 50 or 75 basis points next month and that officials would be in no hurry to reverse course next year. That pushes back against investor bets that the Fed will cut rates before the end of 2023.
The officials spoke a day after the release of minutes from the July Fed policy meeting, which showed officials judged it would eventually be appropriate to slow the pace of interest-rate increases, with some advocating the Fed keep them at elevated levels for some time after increases concluded.
