Thursday, July 7 2022

St. Louis Fed President James Bullard said the central bank needed to quicken its pace of raising interest rates as inflation hit its highest level since 1982 in January.

The shares reversed lower in premarket trading after the comments, which came after similarly hawkish remarks from him last week sparked a sharp selloff.

“I think we need to anticipate our planned housing move more than we would have before,” Bullard said. CNBC Monday. “We were surprised by the rise in inflation. That’s a lot of inflation.”

On Thursday, the Ministry of Labor announced the Consumer price index – a commonly used measure of inflation in the United States – rose 7.5% year-on-year in January, marking its strongest price growth since February 1982. It was also an acceleration from the December rate of 7.1%.

Bullard added that the CPI reports for the past four months combined formed his more hawkish stance on Fed rate hikes. They signal that inflation is widening and warming instead of signaling that it will naturally moderate in a “reasonable time.”

“Our credibility is at stake here and we have to react to the data,” he told CNBC, adding that the Fed needed to bring inflation back to its 2% target. “However, I think we can do it in an organized and non-market disruptive way.”

Last week Bullard said Bloomberg that he favors a 50 basis point rate hike at the next meeting in March and that he wants a total of 100 basis point rate hikes by July.

He doubled down on his remarks on Monday, adding that he would “convince” his colleagues of his position, which he considers a “good one”.

Bullard also pointed out that low- and moderate-income households are hit hardest by high inflation.

“People are upset, consumer confidence is down,” he told CNBC. “It’s not a good situation. We have to reassure people.”

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