(Tiper Stock Exchange) – The Federal Reserve needs to raise interest rates further and then keep them at a high level throughout the next year, with financial markets underestimating the chances that policymakers will have to be more aggressive next year in raising interest rates to curb inflation. She supported it James Bullardpresident of the Federal Reserve Bank of St. Louis, in an interview with MarketWatch.
“We have a long way to go in becoming restrictiveBullard said, reaffirming his belief that the FED policy rate needs to rise to at least a range of 5.00% to 5.25% from its current level of 3.75%-4.00% to be “tight enough” to reduce inflation.
The FED raised its policy rate by 375 basis points this year, the fastest pace of tightening since the early 1980s. Once they reach a high enough level, rates”they are expected to remain there throughout 2023 and into 2024given the historical behavior of inflation, Bullard pointed out.
“We want to get this inflation under control long before it was in the 1970s‘he added, saying he prefers to raise the policy rate soon to create the conditions for price pressures to ease throughout next year. ‘There is still a strong degree’ of expectations that inflation will disappear naturally, he said. said however Bullard, with reference to certain expectations on the markets.
“The job market continues to be extremely stronghe added in another passage, citing projections for adding 200,000 jobs in data due Friday.