News from the Financial Associated Press, January 6 (edited by Shi Zhengcheng)On Thursday local time, St. Louis Fed President Bullard, who has been known as the “Eagle King” for the past year, unexpectedly put on a benevolent face, and some dovish remarks shocked the market.
In a speech to the CFA Institute in St. Louis, Bullard was quite positive, saying that the Fed has already taken aggressive action in 2022, and with further policy rate increases planned for 2023, inflation expectations will return to the 2% policy target. consistent level.
According to reports, although Bullard himself did not give a clear expectation of the final interest rate, or express his views on the Fed’s further moves in early February. But his presentation suggested that Fed officials’ median forecast (5.1 percent) for the end of this round of rate hikes in December last year was sufficient to keep inflation in check. Bullard emphasized that the policy rate is not yet in an area where it might be considered restrictive enough, but it is getting closer.
(The dot plot submitted by Fed officials last December, source: FOMC) Bullard’s remarks seemed to give a shot in the arm to the sluggish U.S. stock market. Lift.
(Minute chart of the three major indices, source: TradingView) At the FOMC policy meeting last December, the Federal Open Market Committee raised the range of the federal funds rate to 4.25-4.50%. The end point of the round of interest rate hikes will be slightly over 5%, which means that there will be at least 75 basis points of interest rate hikes in the next few months.
Bullard said 2023 will be a year of disinflation (a slowdown in the pace of inflation) as policy rates reach a point where they are sufficiently constraining for the economy, along with lower inflation expectations.