(Finance) – The president of the St. Louis Fed, James Bullard, he said the Federal Reserve must act boldly in raising interest rates and in his view the federal funds rate is expected to hit 3.5% by the end of this year. “We have to act decisively and aggressively to reverse the trend and keep inflation under control, otherwise you risk a decade of high and variable inflation, “he said during a round table on central banks and inflation organized by UBS.
“Therefore play early, get inflation under control in a short time and bring it back to the 2% path, “explained Bullard, stressing that inflation must be” nipped in the bud before it takes root in the economy. “” If all goes according to plan, the inflation rate will go down, “he added. admitting that many times things don’t go according to plan.
US consumer prices showed a year-on-year rise of 8.6% in May, with the core figure up 6%. “There are huge risks, but we will do our best“, he pointed out, adding that it is too early to talk about a recession as there are no signs of imminent backlash from households and the effects of the reopening will continue until the fourth quarter of 2022.
Federal Reserve Chairman Jerome Powell reinforced his resolve to cool inflation yesterday in his Congressional Banking Commission hearing. Powell defined the central bank’s commitment to curb rising inflation as “unconditional”while recognizing that the high interest rates needed to do so could increase unemployment and the risks of a recession.
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