More rate hikes sooner, says one Federal Reserve official.
Federal Reserve Bank of St. Louis President James Bullard argues in favor of “front-loading” big interest-rate hikes. He is not alone in saying that we should target rates at 4% by the end of the year to counter the hottest inflation in four decades.
“We still have some ways to go here to get to restrictive monetary policy,” Bullard told CNBC yesterday. “I’ve argued now with the hotter inflation numbers in the spring, we should get to 3.75% to 4% this year. Exactly whether you want to do that at a particular meeting or some other meeting is a great question. I’ve liked front-loading. I think it enhances our inflation-fighting credentials.”
Federal Reserve Chair Jerome Powell has been pointing to a slightly lower target of around 3.4% by year’s end.
Bullard said that unless we see clear signs of inflation falling significantly, “we will need to keep rates higher for longer.”
The Fed just raised rates by 75 basis points for a second straight meeting and it is possible to see another increase of that size in September.
Both Powell and Bullard say that the U.S. is not in a recession, citing strong jobs growth as a key indicator even though we have seen two quarters of negative gross domestic product numbers.