St. Louis Federal Reserve Bank President James Bullard, who is regarded as a “super hawk”, unexpectedly “released doves” on Thursday (5th) and pointed out that the policy rate is close to being sufficiently restrictive to reduce inflation. 2023 could be the year we say goodbye to soaring inflation.
The Federal Reserve (Fed) slowed down the pace of interest rate hikes after raising interest rates four times last year by 3 yards. It announced a 2 yard hike in 12 months of last year, bringing the federal funds rate to a target range of 4.25%-4.5%. Fed officials expect policy to remain tight this year, with 17 of 19 expecting rates to exceed 5% by the end of 2023 and none predicting a rate cut this year.
In a speech to business leaders in St. Louis, Bullard mentioned that U.S. inflation is still too high, but some indicators are coming down, and 2023 may be the year to say goodbye to soaring inflation. achieve the goal of reducing inflation.
“Compared to the fall of 2022, the chances of a soft landing for the U.S. economy have increased, as the labor market has not softened as many have forecasted, and the labor market can remain fairly resilient in 2023,” Bullard said optimistically.
Bullard predicted: “With the strong labor market, now is a good time to curb inflation. Although the policy rate is not yet restrictive, it is approaching and is expected to reach this level this year.”
This statement suggested that he might give up his view of the end-point interest rate exceeding 5%, slightly improving market sentiment, which led to a short-term decline in the U.S. dollar on Thursday and U.S. stocks off their intraday lows.Dow JonesIt closed down 339.69 points on Thursday, and the two-year 10-Year U.S. Treasury YieldThe curve inverts and narrows.
Compared with Bullard, many Fed officials continued to maintain a hawkish stance on Thursday. Kansas City Federal Reserve Bank President Esther George believes: “The federal funds rate will remain above 5% for a period of time until 2024. The Fed is getting signals that inflation is indeed starting to move back toward its 2 percent target.”
Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday: “Inflation remains too high and remains the biggest headwind facing the United States. We welcome recent signs of easing price pressures, but the Fed still has a lot of work to do.” Do.”