Federal Reserve Bank of St. Louis president James Bullard said the central bank needs to move quickly to raise interest rates to around 3.5 per cent this year with multiple half-point hikes and that it shouldn’t rule out rate increases of 75 basis points.
“More than 50 basis points is not my base case at this point,” Bullard said in a virtual presentation to the Council on Foreign Relations on Monday adding the Fed under Alan Greenspan did such a hike in 1994 leading to a decade-long expansion. “I wouldn’t rule it out, but it is not my base case here.”
“I’ve even said we want to get above neutral as early as the third quarter and try to put further downward pressure on inflation at that point.”Fed chairman Jerome Powell has said that a 50 basis-point increase is possible at the Fed’s May 3-4 meeting. Comments by colleagues since then have hardened expectations they’ll make that move, as officials extend a hawkish pivot to curb the hottest inflation since 1981.