The Federal Reserve (Fed) must accelerate the pace of interest rate increases to fight rising inflation, but can do it in a way who does not roll financial markets, St. Louis Fed President James Bullard said Monday.
“Our credibility is on the line here,” Bullard said on CNBC. After consumer prices peaked jump in 40 years in January, he said, the Fed should “preload” its shares and increase the reference loan rate to 1% in July.
Bullard, Voting Member of that of the Fed policy-implementation committee place, caused a strong market reaction last the week with similar comments on the need remove the stimulus from the economy offered during the COVID-19 pandemic.
The consumer price index (CPI) in January jumped 7.5% from a year earlier, its biggest increase since 1982.
Bullard said the data was limited to four months of worrying reports that “inflation is widening and possibly accelerating in United States economy.”
“We were surprised on the upside on inflation. It’s a lot of inflation in United States economy,” he said.
Bullard said he would try to convince his central bank colleagues of the need at move quickly, but defer to Fed Chairman Jerome Powell.
“I think that we need front load more of our planned move of housing than we would have before,” he said.
“However, I think we can do it in a way which is organized and does not disrupt the markets,” he explained.
The Fed’s next policy the meeting is set for March 15-16, and some economists say that the central bank could even make an aggressive, half-increase of points at signal his determination to contain rising prices.
