Fed’s Bullard Wants to Raise Bank Rate to 3.5% by Year’s End, Hints at 75 Basis Point Rate Hike – Bitcoin News

James Bullard (12th President of the Federal Reserve Bank of St. Louis) believes the U.S. central banks can raise the benchmark interest rate by 75 basis point this year. Bullard is optimistic that the Fed will raise interest rates to 3.5% during the fourth quarter in 2022, to counter the frighteningly high inflation.

James Bullard Says ‘Inflation Is Far Too High,’ St. Louis Fed Chief Hopes to See Large Interest Rate Increases Going Forward

Bitcoin.com News published a report on March 16 regarding the Federal Reserve raising its benchmark bank interest rates for the first times since 2018. The Federal Open Market Committee and Fed Chair Jerome Powell increased the benchmark bank interest rate by 0.25 percent to close to zero. This was in addition to the previous increase of 0.25 to 0.25 percent. They also wanted to achieve 0.25% or 0.50%. However, U.S. inflation continues to be high as data from March Consumer Price Index (CPI report) showed that it is at its highest level for 40 years.

This week, the St. Louis Fed chief James Bullard explained on Monday that inflation in America was “far too high,” during a virtual presentation managed by the Council on Foreign Relations. After the Fed raised interest rates in mid-March, the FOMC noted that “ongoing increases…will be appropriate.” Bullard wholeheartedly agrees and he further explained that increases could be even higher than 50 basis points. According to the St. Louis Fed Chief, Alan Greenspan raised the benchmark rate 75 basis points by 1994.

“More than 50 basis points is not my base case at this point,” Bullard stressed during the Council on Foreign Relations’ virtual event on Monday. Bullard further noted that Greenspan’s decision helped bolster a significant rebound in the American economy. “That one was successful, and did set up the U.S. economy for a stellar second half of the 1990s — one of the best periods in U.S. macroeconomic history,” Bullard remarked during the presentation. Bullard added:

And in that cycle, there was a 75 basis point increase at one point, so I wouldn’t rule it out.

Report Highlights the Fed ‘Creating More Inflation by Expanding the Central Bank’s Balance Sheet,’ Bullard Hopes to Put ‘Further Downward Pressure on Inflation’ by Q3

Despite Bullard saying inflation was “far too high,” the economist and gold bug Peter Schiff has asked why the U.S. central bank’s balance sheet keeps increasing. For instance, a report published on Schiff’s website explains that “in the week ending April 13, the balance sheet grew by $27.9 billion, hitting a new record of $8.965 trillion.” Schiff’s findings highlight that the balance sheet is up $3 billion from the high recorded in March.

“For all the talk of fighting inflation and shirking its balance sheet, the Fed continues creating more inflation and expanding its balance sheet,” Schiff’s blog post explains.

The St. Louis Fed branch president did not expand upon the Fed’s balance sheet and much of the inflation blame game was placed on Covid-19 and the current Ukraine-Russia war. Bullard stressed during his talk that he would prefer to see the benchmark rate hiked up to 3.5% by the year’s end. Currently, the Fed has six remaining FOMC meetings in 2022 and Bullard thinks that half-percentage-point increases or larger are feasible.

“What we need to do right now is get expeditiously to neutral, and then go from there,” Bullard insisted during his presentation on Monday. “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,” the St. Louis Fed branch president concluded.

What do you think about the St. Louis Fed branch president’s recent statements on how the Fed should tackle inflation by raising benchmark interest rates? Please comment below on your views.

Jamie Redman

Jamie Redman is the News Lead for Bitcoin.com News. He also lives in Florida and works as a journalist covering financial technology. Redman joined the cryptocurrency community in 2011 and has been an active member ever since. Redman is passionate about Bitcoin and open-source codes. Redman has contributed more than 5,000 articles to Bitcoin.com News since September 2015. These articles are about disruptive protocols that are emerging.