Fed's Bullard: Fed will have to go higher on policy rate

Eren Sengezer FXStreet

St. Louis Federal Reserve President James Bullard said on Monday that the Fed wants to fight inflation while the labour market remains strong and added that the policy rate will have to go higher this year, perhaps by 50 basis points.

Additional takeaways

"Base case remains relatively slow growth for the rest of this year and into 2024, recession probabilities are overstated."

"SEP median of 5.1% was based on slow growth and inflation improvements that have not occurred."

"Companies are still scrambling for workers; job growth remains above trend."

"Core measures of inflation have not changed much in recent months."

"If inflation is not controlled, the Fed will have to do a lot more, should err on the side of doing more."

"Households are still flush and that will continue to support consumer spending."

Market reaction

These comments failed to trigger a significant reaction in the US Dollar Index, which was last seen trading flat on the day at 103.15.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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