St. Louis Federal Reserve Bank President James Bullard made another hawkish remark on Monday (14th), saying that due to the alarming inflation data, the Federal Reserve (Fed) needs to raise interest rates earlier, otherwise it will jeopardize the Fed’s control of inflation data reputation.
Bullard said in an exclusive interview with CNBC that the inflation data this time is very high compared to the past, so the previous easing policy should be cancelled earlier than originally planned. He also said that the credibility of the Fed’s control of inflation data is at risk. , must react to the data immediately, trusting that the Fed can accomplish control of inflation in an organized and market-free manner.
Bullard said last week that the Fed needs to be more responsive to inflation shocks, supporting a cumulative 100 basis point (4 yards) hike in interest rates by July 1. In addition, in an interview with Bloomberg, he had estimated that by the end of 2022 There will be seven rate hikes of 25 basis points (1 yard) each.
Federal Open Market Committee (FOMC) officials have all said they want to start raising interest rates in March, but Bullard is the most hawkish of them all. Other officials believe that a rate hike at the March meeting will be enough.
San Francisco Federal Reserve Bank President Mary Daly said a few days ago that if raising interest rates too aggressively, it may have a negative effect on the Fed’s goal, which may indicate that she does not agree with raising interest rates by 0.5 percentage points at a time next month (2 yards) . Daley expressed a preference for action in March and then to watch, measure and make the next rate hike at the best time.
However, Bullard insisted that inflation has been going on for several months, and the Fed needs to take strong measures in using tools to control prices. Regarding the January CPI data released last week, Bullard himself interpreted more than just that. Data for the month was reported, with the last four reports showing that U.S. inflation is expanding and likely to accelerate.
Bullard said that the current inflation is very bad for low- and middle-income households, and consumer confidence is falling, which is not a good situation, and said the Fed needs to defend the inflation target it has set, so that the current inflation will return to 2 %.
Despite soaring inflation, the Fed plans to buy another $20 billion in U.S. Treasuries and nearly $28 billion in mortgage-backed securities (MBS) next month before ending the bond-buying program in March.
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