St. Louis Fed president James Bullard is speaking in a Reuters Spaces interview and says:
- I would support a rate increase at March meeting
- I would also prefer to raise rates at May meeting if I was deciding today
- inflation is quite high right now
- I don't think a 50 basis point incrrease really helps us right now
- we are doing a light here even though we haven't yet raise rates
- I am thinking of March meeting and second-quarter for potential rate hikes, and then getting going on balance sheet reduction
- In July and August we'll be able to assess how robust inflation seems for rest of the year and adjust accordingly
- If inflation ebbs as expected, we may not have to be as aggressive and second half of the year
- I think market pricing in a five hikes this year is not too bad a bet
- I don't think inflation will moderate much before midyear
- I'm a little pessimistic on inflation compared to the market
- I see rest of world having more geopolitical risk than in recent years in 2022
- China Covid zero policy for omicron also a risk
- I see strong US demanding growth at 4% for 2022
- That is not too good for inflation number this year and would like to guard against that case
- if take steps now, we can in middle of year see where we are on uncertainties.
- Fed is data dependent. This is a fast moving environment.
- We do not want to disrupt markets. Also need to keep inflation under control.
- Our previous forward guidance suited eight different era
- We are going to have to be more nimble, faster, better at reacting to inflation and other developments this year
- I'd like to start reducing balance sheet in Q2
- runoff cann be faster than last time
- I think we can get significant balance sheet reduction pretty soon
- Fed is not that far from neutral if you considerr both rate and balance sheet together.
- If we had to, we could go above the neutral rate.
- I am confident we are not behind the curve
- it is an open question on whether the Fed will have to become restrictive in policy
- I think it's premature to be worried about the yield curve, but I do consider the slope of the yield curve
- I don't think the market so far thinks we will let inflation get out of control
- I think unemployment rate will go below 3% this year.
- Firms are scrounging around for workers.
- I think labor force participation has been affected by retirements, those people unlikely to return.
- I think upcoming monthly jobs report will not be good
The comments may not be congruent with that of the chair (more hawkish),but are more in line with the markets perception..
The NASDAQ index is trading down around 28 points. The S&P is near unchanged on the Dow industrial average is up 55 points