(Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard said the central bank may need to raise interest rates to higher levels this year than previously anticipated after inflation accelerated to a fresh four-decade high.
The Fed probably should increase the benchmark rate to a range of 3.75% to 4% by the end of the year, rather than 3.5%, Bullard said Friday during a virtual event hosted by the European Economics & Financial Centre. That implies about 2.25 percentage points of tightening from current levels.
He said how the Fed gets to that level will be determined by him and his colleagues at coming meetings. Bullard didn’t address whether he would support a 75 basis-point or 100 basis-point move at the gathering later this month, though he was quoted this week as saying he favored sticking with a 75 basis-point rate increase later this month following the inflation data.
“Inflation is proving to be broader and more persistent than we would have thought even 60 or 90 days ago,” Bullard said.
The Fed last month raised the federal funds rate target by 75 basis points, the biggest hike since 1994, to a range of 1.5% to 1.75%.