(Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard said the US central bank should raise interest rates above 5% expeditiously to ensure price pressures are subdued.
Noting the median projection of the Fed’s last forecast showed policymakers favoring raising rates to 5.1% this year, Bullard said Thursday that “it would be appropriate to get there as soon as possible” and then go on hold.
“The Fed is going to have to maintain rates at high enough levels” to bring inflation down and keep it down, he told a virtual event hosted by the Wisconsin Bankers Association.
Fed officials are mulling a further moderation in the pace of rate hikes following a slowing in US inflation. Consumer prices rose 6.5% in the 12 months through December, marking the slowest inflation rate in more than a year, Labor Department data showed. Excluding food and energy, the so-called core CPI rose 0.3% last month and was up 5.7% from a year earlier, the slowest pace since December 2021.
Fed officials lifted rates by a half-point last month to a target range of 4.25% to 4.5%, slowing the pace of rate increases after four straight 75 basis-point moves. Fed officials see interest rates rising above 5% this year and staying there until 2024, according to projections released by policymakers last month.
Philadelphia Fed President Patrick Harker, speaking Thursday morning shortly after the Labor Department’s release of consumer price data, said rate hikes of a quarter-percentage point “will be appropriate going forward.” Harker’s comments echoed remarks a day earlier from Susan Collins, his counterpart at the Boston Fed.
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