Bullard: US Inflation could get out of control if we don’t act quickly

US inflation is “far too high,” according to Fed member James Bullard’s statements on Monday. Bullard offered further insight on the outlook for Fed’s monetary policy. Bullard is one of the bank’s most hawkish and has called for interest rates to reach 3.0% this year.

Bullard repeated his case for increasing interest rates to 3.5% by the end of the year to rein in inflation expectations and slow what are now 40-year-high inflation readings.

“What we need to do right now is get expeditiously to neutral and then go from there,” Bullard said at a virtual event held by the Council on Foreign Relations, adding that he doesn’t expect to need to raise rates by more than half a percentage point at any meeting.

He said that the Unemployment Rate can continue to fall even with aggressive rate hikes, repeating his view that unemployment, now at 3.6%, will go below 3% this year.


The US dollar is firm on the day and hit a fresh two-year high on Monday in thin and choppy trading, in line with higher US Treasury yields, as investors braced for multiple half a percentage-point rate hikes from the Federal Reserve.

Key Quotes:
Would be open to a ‘reverse twist’ although for now happy to go ahead with passive runoff plan for Fed’s balance sheet.

If inflation doesn’t go down as hope, could reduce the balance sheet faster as a ‘plan b’.

If war in Ukraine took a turn for the worse it could affect u.s. monetary policy, but that’s not my base case.

Fed’s credibility is being tested.

Inflation expectations could get out of control if we don’t act quickly.

If we act quickly, we’ll get inflation expectations under control, and inflation will go back to down.