Friday (3rd) St. Louis Federal Bank President James Bullard urged the adoption of a hawkish monetary policy and called on the Federal Reserve (Fed) to complete taper reduction and early interest rate hikes by March next year. The main reason is It is the unexpectedly high inflation, strong economic growth, and the labor market is very tight and may deteriorate further.
The rising rate of new crown vaccination, the restart of the economy and the strong recovery of the service industry have kept the U.S. labor market tight. The U.S. Department of Labor announced on Friday (3rd) that non-agricultural employment increased by 210,000 in November, which was far below market expectations. This year’s lowest, the unemployment rate fell for six consecutive months to 4.2%, almost back to the level before the outbreak.
The president of the St. Louis Union Bank, who has always been the most hawkish, Brad said on Friday: “November recruitment data looks quite strong, and the economy is currently recovering. This is a very tight labor market… It is expected that non-agricultural employment will be Correct upwards.”
Brad warned that the current danger is that inflation is too high, and the FOMC should consider speeding up the pace of removing easing policies at the upcoming meeting.
Fed decision-making members will hold the next monetary policy meeting from December 14th to 15th, and will consider speeding up the reduction of the debt purchase plan, which is currently expected to end in June next year. The Fed’s interest rate since March 2020 is still close to zero.
Economic data has raised concerns that rising inflation will not disappear soon. Fed Chairman Bauer admitted last month (30th) that it is time to abandon the term “temporary” regarding inflation, and the Fed is considering several advances. End of the month to reduce debt purchases.
Brad believes that the Fed should end its bond purchase program by March next year, so that the Fed can start raising interest rates as early as the spring when it needs to control inflation.
In addition, Brad also mentioned that it is too early to predict how omicron will affect the US economy. The economy has adapted to the epidemic and the earlier new crown variants, and the United States will be able to cope with this situation.
Sameer Samana, senior global market strategist at Wells Fargo Investment Research Institute, said Friday’s non-farm payrolls report did not stop the Fed from speeding up Taper.
Barclays chief US economist believes that the Fed will view the economy as close to full employment. Not only is it expected that the Fed will accelerate Taper in December, but it will also start raising interest rates in March.
Goldman Sachs economists pointed out that non-agricultural employment readings have been revised upwards for several months this year, partly due to difficulties in data collection during the epidemic.
