News from the Financial Associated Press on January 13 (edited by Shi Zhengcheng)St. Louis Fed President James Bullard, who just stepped down as a voting member of the Federal Reserve Open Market Committee, urged his colleagues to complete the process of raising interest rates as soon as possible during a video conference of the Wisconsin Bankers Association on Thursday local time.
Like Harker, who played earlier, Brad also made a statement after the CPI data was released.While acknowledging that inflation is showing signs of slowing, he also stressed thatThere is still a need to continue raising interest rates, and the sooner the better。
As the background of this speech, the December CPI growth rate disclosed by the US Department of Labor earlier on Thursday fell back to 6.5%, which was also the first time that US inflation fell below 7% in nearly a year. influenced by,The CME “Fed Watch” tool shows that the market expects that the probability of the Fed raising interest rates in the February resolution will drop to 25 basis points has increased to more than 90%.
(Source: CME) According to the logic of slowing down rate hikes, if the “slightly more than 5%” expected by the Federal Reserve is to be realizedwhich means that interest rate decisions in February, March and May will all raise interest rates by 25 basis points, to reach the 5%-5.25% range. Brad has a different view on this.
Rate hike strategy is no longer so important
Bullard emphasized on Thursday that the Fed’s strategy of “pre-hiring interest rates” last year had well controlled inflation expectations and should continue this year. The Fed needs to avoid a repeat of the mistakes of the 1970s, so it has to keep interest rates high enough to keep inflation down.
Brad also mentioned,A rate of just over 5% may be enough to keep inflation in check, and his preference is that if rates are going to be raised to 5%, they should be there as soon as possible, and then maintain it. Brad said,he sees no point in procrastinating, and the “strategy” of the Fed’s next move is not important to the overall economy. American households are still well off and should be able to support consumption this year.
As the “Eagle King” who has sprung up during this round of interest rate hikes, Bullard was unexpectedly “dove” in his speech last week, not only pointing to the Fed members’ average final interest rate expectation (5.1%) as saying that it is enough to limit the economy, 2023 is also expected to be a year of disinflation.
(Brad’s handout, source: St. Louis Fed) But on Thursday, Brad still showed his “eagle feet.” Although he continued to emphasize that 2023 will be remembered by history as a year of downward inflation,But inflation is unlikely to plummet, and the market is not fully pricing in the twists and turns. The most likely scenario at present is that inflation will remain above the 2% target for a sustained period, so the policy rate will need to remain higher for a longer period of time.
In terms of economic recession, Bullard believes that the prospects for global economic growth have become brighter in the past few weeks. As the risk of recession decreases, the chances of a “soft landing” for the US economy have increased.