Bullard Says Fed Hikes Have Caused Little Financial Stress

Bullard Says Fed Hikes Have Caused Little Financial Stress

(Bloomberg) — Federal Reserve Bank of St. Louis President James Bullard said the central bank’s aggressive interest-rate hikes so far have made relatively small waves in financial markets and defended policymakers’ strategy of “front-loading” increases.

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“The front-loading strategy is the right one,” Bullard said Saturday during an event on the sidelines of this week’s annual meetings of the World Bank and International Monetary Fund, when asked about the latest data that showed inflation proved persistent in September.

He said he’s glad that the Fed’s 75 basis-point rate increases hadn’t caused any significant market turmoil. “We’ve managed to get this far with relatively low financial stress,” Bullard said.

Bullard votes on monetary policy this year and has been one of the more hawkish officials on its 19-member policy committee.

The US central bank is raising interest rates at the most rapid pace since the 1980s to curb inflation at 40-year highs. It hiked rates by 75 basis points for the third straight meeting last month, to a target range of 3% to 3.25%, and looks on track to do the same again when it gathers in early November.

Investors see a solid chance the Fed will continue at that pace at its December meeting after data Thursday showed core consumer prices rising again in September and are predicting rates will nudge towards 5% in 2023. Projections released Sept. 21 by the Fed showed officials expecting rates to rise to 4.4% this year and 4.6% next, according to their median estimate.

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