“Federal Reserve President Bullard Comments on Interest Rates and Inflation: The Latest News and Market Reaction”

Investing.com – St. Louis President James Bullard said on Friday that an increase approved by the Federal Reserve on Wednesday was a “good move” in fighting inflation.

“Inflation remains high in the US economy, so a rate hike was a good next step for the committee,” Bullard said in the first comments to monetary policymakers since the Fed’s last meeting.

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The Fed may raise rates again

The St. Louis Fed president added that policy makers may have to push interest rates higher to calm inflation, but said he would wait and see what the data showed before the next rate hike due in June.

“The hawkish policy we’ve had in the last 15 months has stopped inflation rising, but it’s not clear that we’re on track for the 2 percent target,” Bullard told reporters after an event in Minneapolis on Friday. He said he’s ready to evaluate economic data as it comes in, but he’ll need to see. significant reductions in inflation” to convince him that higher interest rates were not necessary.

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Soft landing

Bullard also said he believes the US central bank can still achieve a soft landing for the economy, with inflation returning to the Fed’s 2 percent target without triggering a severe recession.

“Yes, the economy could go into recession, but that’s still very unlikely,” he told the Economic Club of Minneapolis. He stressed that the closest scenario is slow growth, along with a weak labor market and low inflation, adding that he does not believe that increasing unemployment is necessary to calm inflation.

Notably, Bullard is not an voter on the Federal Open Market Committee to set interest rates this year.

The job market is still strong

He also said Friday’s jobs report was stronger than expected, and indicated that job opportunities are still much higher than they were before the pandemic. He commented, “It will take some time to calm him down.”

And the employment report issued by the Ministry of Labor showed, for the month of April, while experts expected an addition of 180 thousand, while the previous reading was revised to record 165 instead of 236 thousand.

On the other hand, it increased by 3.4% in April. While expectations were for an increase of 3.6%, while the rate rose by 3.5%, compared to the previous reading.

interest decision

Federal Reserve officials raised interest rates by a quarter point last week to a target range of 5 percent to 5.25 percent, the highest level since 2007, while signaling they may pause at their June meeting.

The move extended the most aggressive tightening campaign in decades as US central bankers battle generationally high inflation rates. Price pressures have eased from their peak but remain more than double the Fed’s target.

Bullard confirmed that he supports the US Federal Reserve raising interest rates by 25 basis points at its previous meeting.

Banking crisis

Bullard also downplayed the recent stresses in the banking sector, which he said could be managed, later telling reporters that he didn’t think like others that the banking turmoil would lead to a tightening of credit that was slowing the economy.

On the other hand, Chicago Fed President Austan Goolsby, in an interview later Friday on Fox News, took a more pessimistic note after saying banking sector pressures could hurt growth and reduce the need for officials to continue raising interest rates. interest rates.

Goolsby, who unlike Bullard has voting rights this year, said it was too early to pass judgment on what the Fed should do about interest rates when it meets June 13-14.

Important data

US Consumer Price Index (CPI) data is scheduled for release next Wednesday.

Core CPI growth, which excludes food and energy, is likely to slow to 5.5% year-on-year in April compared to 5.6% growth in the previous month.

According to many experts, the data will serve as a guide for the Federal Reserve, and will help it decide on the possibility of pausing the series of rate hikes at its next meeting.

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