The Federal Reserve must put a “brake” on economic activity in order to deal with rising prices, James Bullard, chairman of the St. Louis Fed, said in an interview with the Financial Times on Wednesday.
He added that it was “fantasy” to believe that the Fed could tame the fastest galloping inflation in the United States in four decades without raising interest rates.
“We need to put downward pressure on the inflation component that we believe is persistent,” he said, calling for an increase in interest rates to a level that would limit growth.
US officials estimate that the “neutral” level for interest rates, that is, the one that will de-escalate inflationary pressures without derailing growth, is about 2.4%. Speaking to reporters last week, Bullard said he would like to see interest rates rise to 3.5% by the end of the year, a target that would require interest rate hikes of half a point at each of the Fed’s six remaining meetings this year. .
Fed officials are largely aligned around the need for steady interest rate hikes this year.
Source: Capital
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