In view of the continued deterioration of recent inflation data, the Federal Reserve (Fed) hawk, St. Louis Fed Bank President James Bullard (James Bullard) on Friday (14th) expressed his support for the “frontloading” strategy, It is predicted that the Fed may raise interest rates by 3 yards in December.
The United States announced on Thursday that the annual growth rate of the consumer price index (CPI) in September was 8.2%. The annual growth rate of the core CPI, which excludes fluctuations in food and energy, rose sharply to 6.6%, a 40-year high.
Bullard, who has always been a hawk, said in an interview on Friday that U.S. CPI data for September showed that inflation had become “harmful” and difficult to contain, so it made sense that the Fed still needs to act fast.
Bullard said that the hot inflation data does not mean that the Fed will have to raise its estimate of the terminal rate (the final rate of the interest rate hike cycle), but because inflation pressures have indeed strengthened, the Fed will A “front-loading” strategy will be necessary.
According to the interest rate point chart released by the Federal Reserve’s September interest rate meeting, the Federal Reserve is expected to raise interest rates by 3 yards in November and 2 yards in December, and may end the rate hike in February and March next year. The annual terminal interest rate is 4.6%.
“If it were today (the Fed meets), I would support a rate hike of the same size (3 yards) in December,” Bullard said, adding that he now expects a rate hike at the last meeting of the year. It’s too early to act.
Bullard emphasized that the path of future interest rate hikes will depend on future data. Despite the turmoil in the financial market, there is still a considerable chance of achieving a soft landing of the economy, and the United States may avoid a recession. His remarks are the most hawkish relative to the Fed recently.
According to CME’s FedWatch tool, traders are predicting an almost 100% chance that the Fed will raise rates by 3 yards next month, more than 66% in December, and 52% in February next year. .