Fed’s Bullard Wants to Raise Bank Rate to 3.5% by Year’s End, Hints at 75 Basis Point Rate Hike – James Bullard, the Federal Reserve Bank of St. Louis’ 12th president, believes the US central bank may raise the benchmark bank interest rate by 75 basis points this year. To tackle the US economy’s red-hot inflation, Bullard predicts the Fed could raise rates to 3.5 percent by the fourth quarter of 2022.
During a virtual talk hosted by the Council on Foreign Relations this week, St. Louis Fed President James Bullard stated that inflation in the United States was “far too high.”
The FOMC stated that “ongoing increases will be appropriate” after the Fed boosted interest rates in mid-March. Bullard agrees heartily, and he goes on to say that hikes might be as high as 50 basis points. In 1994, Fed Chair Alan Greenspan lifted the benchmark rate by 75 basis points, according to the St. Louis Fed chief.
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“At this moment, more than 50 basis points is not my base case,” Bullard said during a virtual session hosted by the Council on Foreign Relations on Monday. Bullard went on to say that Greenspan’s decision aided in the recovery of the American economy.
Despite Bullard’s claim that inflation is “far too high,” economist and gold bug Peter Schiff has questioned why the Federal Reserve’s balance sheet continues to grow. “In the week ending April 13, the balance sheet rose by $27.9 billion, establishing a new high of $8.965 trillion,” according to a report on Schiff’s website. According to Schiff’s calculations, the balance sheet has increased by $3 billion since its peak in March.
The head of the St. Louis Fed branch did not go into detail about the Fed’s balance sheet, and much of the blame for inflation was placed on the present Ukraine-Russia war.
During his speech, Bullard stated that he would love to see the benchmark rate raised to 3.5 percent by the end of the year. Bullard believes that half-percentage-point or higher rises are possible during the Fed’s final six FOMC sessions in 2022.
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Fed’s Bullard Wants to Raise Bank Rate to 3.5% by Year’s End – During his presentation, Bullard insisted, “What we need to do right now is get to neutral as quickly as possible, and then move from there.” “I’ve even stated we want to reach above neutral in the third quarter and try to put downward pressure on inflation at that point,” the president of the St. Louis Fed branch concluded.