Fed’s Bullard says central bank should curb economic activity -FT By Reuters

© . FILE PHOTO: St. Louis Fed President James Bullard speaks about the US economy during an interview in New York on Feb. 26, 2015. REUTERS/Lucas Jackson () -The US Federal Reserve must curb economic activity to deal with rising prices James Bullard, president of the St. Louis Fed, told the Financial Times in an interview https://on.ft.com/3uBKcZZ. It is a “fantasy” to think the Fed can contain the fastest US inflation in four decades without aggressively raising interest rates, he said. “We need to put downward pressure on the component of inflation that we think is ongoing,” the paper quoted him as calling for rates to be raised to levels that would hold back growth. US officials estimate the “neutral” level for the Federal Funds rate at about 2.4%. Bullard said in comments to reporters last week that he would like to see the key rate hiked to 3.5% by the end of the year, a target that will require rate hikes of half a point at each of the Fed’s six remaining meetings. this year. Fed officials are largely attuned to the need for steady rate hikes this year. But there is nevertheless division over how to view incoming inflation data and whether a series of larger half-point increases will be justified. A report on Tuesday showed that consumer prices were up 8.5% in the past 12 months, but some policymakers noted that the inflation of a number of key goods appeared to be slowing, a sign that headline inflation could also peak. To the contrary, Bullard told the Financial Times that the latest data “underscore the urgency that the Fed is behind the times and needs to get moving.”

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