"'Hawkish' Fed Bullard: US Inflation at 1970s Level... Economic Expansion to Continue This Year"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Seolgina Jo] James Bullard, President of the Federal Reserve Bank of St. Louis and a prominent "hawk," stated on the 20th (local time) that U.S. inflation is at levels comparable to the 1970s and argued that the Federal Reserve (Fed) should continue its tightening measures in line with market expectations. He also predicted that the U.S. economy would continue to expand this year.

President Bullard made these remarks at an event held in Barcelona, Spain, saying, "U.S. inflation is at the same level as in the 1970s." He is one of the 12 voting members of the Federal Open Market Committee (FOMC), which sets U.S. interest rates. This statement was his first public comment since the Fed's recent giant step of raising the benchmark interest rate by 0.75 percentage points at once.

Bullard, classified as a leading hawk within the Fed, emphasized, "Without credible Fed actions, U.S. inflation expectations will become unanchored," and stressed, "Aggressive rate hikes must continue."

He referred to the fact that the Fed has already raised rates in the past three meetings and mentioned, "We are prepared for additional hikes in upcoming meetings." He added, "The market is already accepting the Fed's hikes," and said, "The Fed must meet market expectations for rate increases to curb inflation."

However, Bullard did not specify the expected size of the rate hike at the July FOMC meeting. Considering recent remarks by Fed officials, the market widely expects another giant step next month. Earlier, Christopher Waller, a Fed governor, also expressed support for a 0.75 percentage point increase.

On this day, Bullard referred to the 1994 tightening cycle, saying, "The tightening caused some disruption that year," but added, "I have always thought it enabled the U.S. economy to achieve remarkable performance in the late 1990s. I hope the same happens this time." During the 1994 tightening cycle, the Fed doubled rates to 6% through one giant step and two big steps (0.5 percentage point increases).

He predicted that the U.S. economy would continue its expansion this year. Bullard stated, "The U.S. labor market remains robust," and mentioned that the U.S. economy would continue to expand through 2022. However, he also noted, "Significant risks remain," citing uncertainties surrounding the Russia-Ukraine war and the possibility of a sharp slowdown in China as threats.

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