The chairman of the Federal Reserve (Fed, the US central bank) district in St. Louis, James Bullard, said this Friday (24) that the anticipation of interest rate hikes by the Fed is a good idea, given the current situation of inflationary pressures.
At a panel hosted by Swiss bank UBS in Zurich, Bullard said he expected US policy rates to reach 3.5% this year.
Recession risk
The Fed District Chair in St. Louis criticized current economic models, which “may not be a good indicator of recession risk”.
On the panel, Bullard predicted that the Fed’s rate hikes will slow the economy, but only to the “trend growth” rate.
He also pondered that the US economy has shown “tremendous” resilience and could experience a “moderate but not significant downturn”.
Bullard also said that households in the US are in a “great position” to spend further down the road as they saved during the Covid-19 pandemic.
balance sheet
The official also said on Friday that the Fed continued to expand its balance sheet “by one more year” than it should have.
At the panel promoted by Swiss bank UBS, in Zurich, Bullard also said that the Fed’s quantitative tightening process is working, “for now”, but it is still in the beginning.
Source: CNN Brasil
