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Elezabeth Thomas
Apr 07, 2022 2:22PM ET
World wide sorriest shape ever.
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Fed's Bullard Says Rate Ceiling of 3.5% Assumes "Generous" Reading of Price Trends
Published Apr 07, 2022 09:06AM ET
Updated Apr 07, 2022 09:36AM ET
© Reuters.
By Geoffrey Smith
Investing.com -- The Federal Reserve may have to raise interest rates further than the market is currently expecting in order to bring inflation down, St Louis Fed President James Bullard said on Thursday.
Bullard, who has been out in front of his colleagues at the Fed in assessing the seriousness of the inflation surge in recent months, said in a speech that the Fed is still well "behind the curve" in the battle against inflation, and argued that even a "generous" reading of current data implies that the fed funds rate should be around 3.5%.
As U.S. inflation surged over the winter to its highest in over 40 years, interest rate futures and other derived market measures of expectations for Fed policy continued to reflect expectations that the central bank wouldn't lift the fed fund rate much above 3%. The Fed had aggressively cut the fed funds target range to just above zero in response to the pandemic, as well as revved up its quantitative easing policy again.
However, it hiked the target range for fed funds to 0.25%-0.50% in March, the first rate hike since 2019, and the minutes of that meeting - released on Wednesday - indicated that many wanted a half-point increase instead, and were only persuaded to make a smaller hike by the uncertainty to the economic outlook caused by Russia's invasion of Ukraine.
Bullard's presentation acknowledged that the Fed may not be as far "behind the curve" as simple monetary policy rules of thumb would suggest. He noted the discrepancy between surveys of inflation expectations and the yields on inflation-linked Treasury bonds, and also said that the credibility of the Fed as an inflation fighter had already ensured that long-term bond yields hadn't risen as far as short-term ones.
"Credible forward guidance means market interest rates have increased substantially in advance of tangible Fed action," Bullard said. "By this second definition of 'behind the curve,' the Fed is not as far behind, but it must now increase the policy rate to ratify the forward guidance previously given."
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Comments (10)
John Whitfield
Apr 07, 2022 11:34AM ET
didnt bullard want rates adjusted so he could "get a good deal on real estate" awhile back?
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John Lakran
Apr 07, 2022 11:18AM ET
Inflation will remain high as long as speculators and hedges are allowed to keep pumping the commodities market. Stop that and inflation will immediately tank
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Milan Shukla
Apr 07, 2022 11:18AM ET
Let me guess, you must be invested heavily invested in high flying stock & haven’t seen any downturn from “friendly” Fed. Nonetheless, money still to be made but now in BEAR ETFs
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ForexInsiders
Apr 07, 2022 11:18AM ET
Actual "Big Money" sold. What you see is the minor institutions/hedge funds forcing S&D fills of those big orders quicker. For every sell order, there has to be an equal buy order. "war" commodities excluded because of its implications of future demand.
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John Lakran
Apr 07, 2022 11:17AM ET
Can we just pay these people to shut up and stay home they are useless anyways
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Jim Divers
Apr 07, 2022 11:09AM ET
He is a clownn
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Iyarin Boonnum
Apr 07, 2022 10:53AM ET
Doom Doom Doom
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peter neal
Apr 07, 2022 10:31AM ET
Buy Gold it's over
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ForexInsiders
Apr 07, 2022 10:31AM ET
Silver has better profit potential, especially with its heavy use in green tech.
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Benjamin USA
Apr 07, 2022 10:29AM ET
Doomsaying nobody will take seriously. Is this assuming they already zero’d their balance sheet? Rate shock is totally unecessary.
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ForexInsiders
Apr 07, 2022 10:23AM ET
"Generous" at 3.5 under these conditions? lol, I remember them trying to pass off early inflation as "transitory". This is who we have running our global economy......
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Benjamin USA
Apr 07, 2022 10:23AM ET
Maybe they will promote you from part time Taco Bell weekend manager and full tome NFT evangalist to the position given your immense qualifications.
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ForexInsiders
Apr 07, 2022 10:23AM ET
Congratulations on a response that didnt include "cuck" for once! Im impressed. But you still have no clue how to have a proper conversation, with assumptions thrown in the mix. But thats ignorance for ya. NFT's are for dumb money, just for a small glimpse into what you dont know. ;) I remember you defending transitory inflation back when Yellen was parroting that line. Are you a paid shills, or just that uneducated? lol
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ForexInsiders
Apr 07, 2022 10:23AM ET
Coming from the guy who was defending Yellens "transitory" statements in these comments months back, and now this? I do congratulate you on leaving out "cuck" in your responses for once. However you need help and education. But that leaves me wondering if you are just a paid shill, or truly that uneducated.
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Jose Cabreja
Apr 07, 2022 10:23AM ET
we didnt pick them to be running anything..they print the $, so they so run us.
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jason xx
Apr 07, 2022 10:05AM ET
Nothing this guy says ever happens
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Tommy Rommazontz
Apr 07, 2022 10:05AM ET
Everything Bullard says ends up happening.
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