The position that the US Federal Reserve should act immediately by raising interest rates was underlined by Board Member James Boulard, calling for a “forward tightening” of monetary policy.
In particular, speaking to CNBC, Mr. Boulard said that the Fed needs to accelerate more than it planned to lift its easing policy, noting that “we are surprised by the upward trend in inflation. And it is a lot of inflation.”
As the head of the Fed of St. Louis characteristically stated, “our credibility is judged on this and we need to react to the data”.
However, he clarified that he believes “that we can do it in an organized way that will not disturb the markets”.
It is recalled that last week, after the publication of the data that showed the jump of inflation to a new high of 40 years, Mr. Boulard had called for an increase in Fed interest rates by 100 basis points by July, causing sharp upheavals on Wall Street.
In this climate, markets are now betting that the Fed’s first rate hike in March will be based on 50 basis points (0.5%).
For his part, J. Boulard reiterated today that “I believe my position is correct and I will try to convince my colleagues on this.”
At the same time, he stressed that the Fed must make strong use of its tools to tame rising prices.
“My interpretation of inflation is not so much based on the last report but on the four, which show that it is expanding and will probably worsen.”
Source: Capital
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