St. Louis Federal Reserve President James Bullard expressed confidence that the central bank can beat inflation and advocated Wednesday for stepping up the pace in the battle.
Bullard told CNBC that a more aggressive interest rate hike now would give the rate-setting Federal Open Market Committee a better chance to bring down inflation that, while falling some off the precarious levels of 2022, is still high.
“It has become popular to say, ‘Let’s slow down and feel our way to where we need to be.’ We still haven’t gotten to the point where the committee put the so-called terminal rate,” he said during a live “Squawk Box” interview. “Get to that level and then feel your way around and see what you need to do. You’ll know when you’re there when the next move could be up or down.”
Those comments come a week after Bullard and Cleveland Fed President Loretta Mester both said they were pushing for a half-percentage point rate hike at the last meeting, rather than the quarter-point move the FOMC ultimately approved.
They said they would continue to favor a more aggressive move at the March meeting. Markets have been volatile in the wake of those remarks as well as a batch of inflation data that came in higher than expected, stoking fears that the Fed has more work to do to bring down prices.
But Bullard said the more aggressive move would be part of a strategy that he thinks ultimately will be successful.
“If inflation continues to come down, I think we’ll be fine,” he said. “Our risk now is inflation doesn’t come down and reaccelerates, and then what do you do? We are going to have to react, and if inflation doesn’t start to come down, you know, you risk this replay of the 1970s … and you don’t want to get into that. Let’s be sharp now, let’s get inflation under control in 2023.”
Despite the tougher talk and hot inflation data, markets still largely expect the Fed to go with the quarter-point move next month, according to CME Group data.
Futures trading indicates, however,…
Read the full article here
