Fed's Bullard Maintains Stance For 1% Rate Hike By July

Zinger Key Points
  • St. Louis Federal Reserve President Jim Bullard is calling for a full percentage point of interest rate hikes over the next three Fed meetings.
  • Bullard told CNBC the fed should react to data, and increase rates in a way "that's organized and not disruptive to markets."

St. Louis Federal Reserve President Jim Bullard announced last week that he had become significantly more hawkish following the hottest inflation reading in almost 40 years. He was calling for a full percentage point of interest rate hikes over the next three U.S. central bank policy meetings. He didn't waver from his stance Monday morning. 

"I do think we need to frontload more of our planned removal of accommodation than we would've previously," Bullard said Monday on CNBC's "Squawk Box." "We've been surprised to the upside on inflation."

See Also: Hawkish Tone Of Fed's Bullard Throws Markets Into Chaos: What To Watch On The SPY

What To Know: Inflation is much higher than what the Fed was expecting six to nine months ago, and certainly higher than what it was anticipating 12 months ago, Bullard said.

"We do have to react to data, however I think we can do it in a way that's organized and not disruptive to markets."

He told CNBC that the inflation we are seeing is very bad for low and moderate income households as real wages decline and consumer confidence falls. 

"This is not a good situation," Bullard said. "We have to reassure people that we're going to defend our inflation target, and we are going to get inflation back to 2%."

What's Next: Bullard expects 3.5% to 4% real GDP growth in 2022.

He noted that data seems to be showing a slowing in the spread of the COVID-19 omicron variant, which he thinks will lead to a second reopening phase for the U.S. economy and ultimately keep corporate earnings intact. 

"I'm not really seeing any threat to the market at this point," he said.

However, Bullard emphasized that the data is quickly changing, and the Fed needs to be able to move with it. 

"We're in an environment where we can't just plot along sort of meeting by meeting and do a little bit here, a little bit there," Bullard said. "We're going to have to react to data and be more nimble in this environment than we would have had to have been in the 10 years prior to the pandemic."

Photo: rzierik from Pixabay.

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Posted In: GovernmentNewsTreasuriesFederal ReserveCNBCJim Bullard
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