NextGen Day

ANKARA, Turkey — To keep record-high inflation under control, the US Federal Reserve must act “aggressively,” according to a senior official.

“We need to get to neutral at the very least,” St. Louis Fed President James Bullard told Bloomberg TV. “We don’t want to put upward pressure on inflation during this era when we have substantially higher inflation than we used to in the US economy.”

Bullard, who is a voting member of the Federal Open Market Committee this year, was the lone FOMC official who urged a 50-basis-point rate hike last week.

Last Wednesday, the FOMC approved a 25-basis-point rate hike, the Fed’s first since late 2018, and signaled six future rate hikes for the rest of 2022.

When asked about the speed of rate hikes, Bullard responded, “I think faster is preferable,” referring to the central bank’s monetary tightening cycle in 1994, when interest rates were raised by 200 basis points in a single year.

“After the (coronavirus) outbreak, inflation caught us off guard. But now you have to raise the policy rate gradually, by a reasonable amount, so as not to cause too much disruption, but I believe 50-basis-point adjustments will be in the mix “he stated

Bullard’s remarks come a day after Fed Chair Jerome Powell stated that the central bank is dedicated to restoring price stability, even if that means hiking interest rates “aggressively.”

“We will take the necessary steps to bring prices back to a stable level. In particular, if we determine that raising the federal funds rate by more than 25 basis points at a meeting or meetings is appropriate, we will do so “he stated during a speech at the annual conference of the National Association for Business Economics in Washington, D.C.

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