date of publication:
February 11, 2022 11:31 GMT
Update date: Feb 11 2022 13:45 GMT
The US Federal Reserve announced its support for raising interest rates by a full percentage point by early July, in response to the highest inflation rate in four decades.
James Bullard, President of the Federal Reserve in St. Louis, who is one of the members with the right to vote on monetary policy this year, said in an interview with “Bloomberg News” that he favors raising rates by 100 basis points by July 1.
“I was really tougher, but I did what I think the committee should do,” he added.
Bloomberg Agency presented Bullard’s plan, saying that it “includes distributing the increases to three meetings, and reducing the Fed’s balance sheet beginning in the second quarter, with the data awaiting following that to make a decision on the course of interest rates in the second half of the year.”
It quoted “Bullard” as saying that he had not made up his mind regarding whether to start the March meeting with a 50 basis point interest rate hike, or to postpone the matter to discuss with the committee led by Federal Reserve Chairman Jerome Powell, who did not rule out taking that step at a press conference in January. .
Bullard’s comments come following announcing that the consumer price index for the month of January rose 7.5%, to record the largest rate of inflation since 1982, amid wide-ranging increases that exceeded food and energy to include home furnishings and health insurance.
Pollard’s opinion was that the inflation report revealed the persistence of inflationary pressures in the United States, which is a matter of concern to me and the Federal Reserve, considering that inflation recorded a higher rate in 40 years, and that we must be smarter and more interactive with the data.
Investors have raised their bets on the pace of rate hikes since the Federal Open Market Committee meeting in January, and have shifted to betting on regarding 6 rate hikes this year versus the 3 that officials had expected in December.
But in the wake of the CPI report; Markets were evenly divided on the possibility of a 50bp hike in March.
Other Federal Reserve officials expressed support for the gradual move.
Pollard had said a decade ago, saying that the “shock and awe” approach is rarely justified, but he returned and said in his interview with “Bloomberg” that the surprisingly high inflation data from October through January requires an appropriate response.
