Hike rates

Fed’s Bullard still wants to raise rates 100 basis points by July

(Bloomberg) – St. Louis Federal Reserve Chairman James Bullard continues to back an interest rate hike of 1 percentage point by July 1 and sees little impact on the U.S. outlook for the Russian invasion of Ukraine.

“Direct ties to the US economy are minimal, so I wouldn’t expect as much direct impact on the US economy,” Bullard said Friday during an interview with SiriusXM Business radio. “Of course, we will have to watch this very carefully and see what happens in the days to come.”

Bullard’s remarks dovetail with comments from other officials since the invasion backing liftoff next month, including his former St. Louis Fed colleague, Governor Christopher Waller, who saw strong arguments in favor of taking off. a half-point move if the economic numbers continue to rise.

“Fighting in Ukraine is something that’s been going on for the last two decades, so in that sense it’s not really new,” Bullard said. “It’s a bigger, more aggressive Russia here, but I think the basic expectation has to be that there won’t be a wider war associated with that. There are risks around that.

Bullard said he continued to urge policymakers to start trimming the balance sheet in the second quarter, in addition to rate hikes that would include a half-point hike over the next three meetings.

“We haven’t really moved fast enough given the path of inflation,” Bullard said. After raising the key rate by 1 point on July 1, “then we could assess where we are and what the next steps would be”.

Friday’s data showed the Fed’s preferred measure of price pressures rose 6.1% in the 12 months to January – three times their 2% target and the most since 1982. Officials get another big piece of evidence next Friday with the February jobs report.

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