'Maepa' Bullard, President of the US Federal Reserve Bank of St. Louis, "Fed Must Raise Interest Rates Quickly"

[Asia Economy New York=Special Correspondent Joselgina] James Bullard, President of the Federal Reserve Bank of St. Louis, stated on the 14th (local time) that the central bank, the Federal Reserve (Fed), should raise interest rates quickly in response to inflation.

President Bullard appeared on CNBC's Squawk Box that day and said, "I was very surprised by the speed at which inflation is rising," adding, "I believe we need to move faster than we previously planned." He argued, "Our (Fed's) credibility is in a precarious situation," and emphasized, "We need to respond based on the data."

Bullard, considered a representative 'hawk,' was the person who argued right after the release of the U.S. January Consumer Price Index (CPI) on the 10th that an aggressive big shot raising the benchmark interest rate by 1.0 percentage point before July is necessary. There are only three remaining Federal Open Market Committee (FOMC) meetings before July 1, which means at least one 0.5 percentage point rate hike is essential. This would be the first time since the 2000s that the Fed raises rates by 0.5 percentage points at once.

Bullard said, "I think my position is good," and "I will try to convince my colleagues that this (rate hike) is good." CNBC reported that while most Fed officials have hinted at a rate hike in March, Bullard is the most hawkish figure. The previous day, Mary Daly, President of the Federal Reserve Bank of San Francisco, argued for a cautious approach, saying, "Sudden and aggressive moves could have destabilizing effects on the growth and price stability we aim to achieve."

On the other hand, Bullard recently cited inflation indicators and expressed the view that the Fed needs to use strong measures to stabilize prices. He pointed out, "The inflation we are seeing is very bad for low-income and middle-class households," adding, "People are unhappy, and consumer confidence is falling. This is not a good situation." He also added, "We must reassure people that we will achieve the inflation target and return to 2%."

Along with this, Bullard mentioned that balance sheet reduction should begin from the second quarter. The Fed's assets, which were $4.1 trillion in January 2020, surged to about $8.8 trillion due to bond purchases to supply liquidity to the market during the COVID-19 pandemic. Wall Street experts see that reducing the Fed's assets by $500 billion has a similar effect to raising interest rates by 0.25 percentage points.

Meanwhile, the New York stock market is showing a downward trend as tensions rise due to the Fed's tightening stance and Russia's airstrikes on Ukraine. As of 2:10 p.m. Eastern Time, the Dow Jones Industrial Average is trading 1.17% lower than the previous close. The S&P 500 index is down 1.14%, and the Nasdaq index is down 0.88%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's 'fear index,' soared 14.99% to 31.46.

This content was produced with the assistance of AI translation services.