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Fed must act 'forthrightly and aggressively' to rein in inflation, Bullard says

Economy Jun 24, 2022 08:55AM ET
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© Reuters. FILE PHOTO: St. Louis Federal Reserve Bank President James Bullard speaks at a public lecture in Singapore October 8, 2018. REUTERS/Edgar Su/File Photo

(Reuters) -The Federal Reserve must act boldly in raising U.S. interest rates in order to contain inflation before higher expectations become entrenched, St. Louis Fed President James Bullard said on Friday.

"We have to act forthrightly and aggressively to get inflation to turn around and get it under control ... or you could suffer a decade of high and variable inflation," Bullard said during a panel discussion on central banks and inflation hosted by UBS in Zurich, Switzerland.

"So front-load today, get inflation under control in short order and get inflation back on a path to 2%," Bullard added.

Last week, the Fed raised its benchmark overnight interest rate by three-quarters of a percentage point - its biggest hike since 1994 - to a range of 1.50% to 1.75%, and signaled its policy rate would rise to 3.4% by the end of this year.

Bullard has previously said he wants to see the Fed's policy rate increase to 3.5% by the end of 2022, a point he repeated on Friday. Once borrowing costs rise high enough to put downward pressure on inflation and disinflationary forces take hold, the central bank could possibly begin to cut rates, he said.

The St. Louis Fed chief also downplayed the risk of recession, saying that rate increases will probably slow the economy to a trend pace of growth, rather than below trend.

"This is the early stages of a U.S. expansion ... unless we get hit by a bit shock or something, it would be unusual to go back into recession at this stage," Bullard said.

On Thursday, Fed Chair Jerome Powell told lawmakers the central bank's commitment to reining in inflation, which is running at a 40-year high, is "unconditional."

Fed must act 'forthrightly and aggressively' to rein in inflation, Bullard says
 

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Comments (4)
Kerry Ditto
Kerry Ditto Jun 24, 2022 10:36AM ET
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Jack up +1% at every meeting until inflation rate falling to 2%. Break the inflation sentiment.
Samuel Ajobo
Samuel Ajobo Jun 24, 2022 9:16AM ET
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So where were these talks when inflation got past 4, and all the stocks were already 500% up, house prices skyrocketing and more…. Please
Angus Malarkey
Angus Malarkey Jun 24, 2022 9:04AM ET
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All sizzle no steak. These people are misleading the public and shtf is coming.
Steve Bojo
Steve Bojo Jun 24, 2022 9:04AM ET
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Nothing was said as to give them time to liquidate positions and/or assets at that time
William Bailey
William Bailey Jun 24, 2022 9:02AM ET
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Why is the Fed still adding to the balance sheet ? Tbey said selling 47b in June, but instead added 30 b so far! Thise are inflationary moves , not deflationary!!
ZS Beck
ZS Beck Jun 24, 2022 9:02AM ET
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Maybe there are no buyers other than the FED? China stops buying a long time ago, they instead invested that money in the economy.
Rona Jonathan
Rona Jonathan Jun 24, 2022 9:02AM ET
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how are you sure that the Fed are adding to their balance sheet
Rona Jonathan
Rona Jonathan Jun 24, 2022 9:02AM ET
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please explain?
 
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