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Fed's Bullard: I hope U.S. economy repeats outcome of 1994's soft landing

Economy Jun 20, 2022 03:00PM 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 U.S. Federal Reserve could raise interest rates swiftly this year and forge a "stellar" economy ahead if it can pull off a repeat of the success of the central bank's 1994 tightening cycle, St. Louis Fed President James Bullard said on Monday.

"That tightening episode caused some disruption that year," Bullard said during an event held by the AXA-Barcelona School of Economics in Barcelona, Spain. "However, I have always felt that set up the U.S. economy for a stellar performance in the second half of the 1990s ... I hope we can get something like that this time."

Bullard has been a vocal backer of aggressive Fed action to tame stubbornly high inflation that is running at more than three times the U.S. central bank's 2% goal. The 1994 tightening cycle saw the Fed double interest rates to 6% in seven rapid-fire hikes that included one 75 basis point and two 50 basis point moves. The Fed's so-called soft landing, in which a recession was averted, was followed by a period of rapid growth and a historically tight labor market.

Last week on the heels of another worse-than-expected inflation report, the Fed raised interest rates by three-quarters of a percentage point to a range of 1.50%-1.75%, but now forecasts borrowing costs more than doubling from that level over the next six months.

Fed Chair Jerome Powell said last week that he anticipates either a 50 or 75 basis point move in July, and since then several policymakers, including those previously more cautious in their approach to reducing price pressures in case the central bank sent the economy into recession, have appeared to back a whatever-it-takes approach.

On Saturday, Fed Governor Christopher Waller called for the Fed to implement another 75 basis point increase at its next meeting in July, saying the central bank is now "all in" on restoring price stability.

Bullard noted the Fed still has some way to go in reducing inflation. "We are moving quickly, but moving from a low level and from the very accommodative monetary policy we put in place," he said.

Fed's Bullard: I hope U.S. economy repeats outcome of 1994's soft landing
 

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Comments (10)
Antonio Velardo
Antonio Velardo Jun 20, 2022 5:00PM ET
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Sure, he is preparing the fuild for turning his positions from bearish to bullish next year. I think he is the best adviser here.
Steve Bojo
Steve Bojo Jun 20, 2022 4:09PM ET
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Hope? 🤣🤣🤣🤣
jason xx
jason xx Jun 20, 2022 3:58PM ET
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1994 didn't have wrecked supply chains cuasing the inflation so it will be easier this time as they normalize the feds job will be easy.
Jim Berm
Jim Berm Jun 20, 2022 3:58PM ET
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yeah but they didn't have an excess $3 Trillion in money supply they need to suck up in 1994, either
Jun 20, 2022 3:52PM ET
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1994 did not have record trade deficits, record CPI prints, and record debt/leverage/asset prices
nick cage
nick cage Jun 20, 2022 3:16PM ET
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What happened in the late 90s. oh ya, the internet and beginning of mortgage backed securities. for some reason this looks more like decade long stagflation.
Brad Albright
Brad Albright Jun 20, 2022 3:14PM ET
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The latter half of the 1990s saw substantial growth because consumers where adopting the Internet, which created a brand new ecosystem for new businesses. Will anything like that develop in the 2020s?
taylor jason
taylor jason Jun 20, 2022 3:04PM ET
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zombie companies were a thing in 94'
adriaan kuhn
adriaan kuhn Jun 20, 2022 2:59PM ET
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dont forget theres trillion more dollars and trillion more dollars of debt mr bullard, it depends on what you think of as a soft landing....dropping an ant from the empire state or an anvil from an anthill
Jack Nicholson
Jack Nicholson Jun 20, 2022 2:59PM ET
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Woah, livin' on a prayer!
Matt Kay
Matt Kay Jun 20, 2022 2:50PM ET
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"Hope you can fix the problem we caused"
 
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