One of the Federal Reserve’s earliest advocates for aggressive rate increases won’t rule out a truly supersize rise, though he doesn’t expect one is needed.
When it comes to the size of a rate increase, one greater than 50 basis points “is not my base case,” Federal Reserve Bank of St. Louis President James Bullard said during a virtual appearance Monday. But he noted the Fed has increased rates by more, and when it comes to a potential 75 basis point increase, “I wouldn’t rule it out.”
Bullard said he remains on board with an almost certain series of half percentage point rate rises as the central bank presses forward with plans to help bring inflation, now at 40-year highs, under control by lifting the federal-funds rate target to around 3.5% by year-end.
Bullard is a voting member of the rate setting Federal Open Market Committee, which last month raised its overnight target rate range by a quarter percentage point to between 0.25% and 0.5%. The FOMC also penciled in more rate increases for this year.
In his appearance Monday, Bullard said inflation is “far too high for comfort, and so we have to move to get inflation under control,” adding “not all hope is lost here. I think we’re in a position where we can maintain credibility and get inflation lower.”
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