St. Louis Federal Reserve Bank President James Bullard, who is considered a “super hawk”, unexpectedly “released the doves” on Thursday (5) and stressed that the official rate is close to being tight enough to reduce the inflation. the year we say goodbye to rising inflation.
The Federal Reserve (Fed) slowed the pace of interest rate hikes after raising interest rates four times last year by 3 meters and announced a 2-meter hike in 12 months last year, bringing the rate on federal funds at a target range of 4.25%-4.5%. Fed officials expect policy to remain tight this year, with 17 out of 19 expecting rates to exceed 5% by the end of 2023 and none expecting a rate cut this year.
In a speech to business leaders in St. Louis, Bullard said US inflation is still too high, but some indicators are falling and 2023 could be the year to say goodbye to rising inflation and achieve the goal of reducing inflation.
“Compared to the fall of 2022, the chances of a soft landing for the US economy have increased, as the labor market has not weakened as many had forecast, and the labor market can remain fairly resilient in 2023,” he said. Bullard with optimism.
Bullard predicted, “With the job market strong, now is a good time to curb inflation. While the policy rate isn’t tight yet, it is getting close and should reach this level this year.”
This statement suggested that it may drop its final interest rate view above 5%, slightly improving market sentiment, which led to a near-term decline in the US dollar on Thursday and US stocks from intraday lows.Dow JonesIt closed down 339.69 points on Thursday, and the two-year e 10-year US Treasury yieldThe curve reverses and narrows.
Compared to Bullard, many Fed officials continued to maintain a hawkish stance on Thursday. Kansas City Federal Reserve Bank President Esther George believes: ‘The federal funds rate will remain above 5% for a period of time to 2024. The Fed is getting signals that inflation is indeed starting to move back toward its 2 percent target.”
Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday, “Inflation remains too high and remains the biggest headwind for the US. We welcome recent signs of easing price pressures, but the Fed has still a lot of work to do.” “
