ST. LOUIS – Saying the Federal Reserve’s credibility is “at a stable level,” Federal Reserve Chairman St. Louis is reiterating his call for a rate hike this summer.
James Bullard, president of the Federal Reserve Bank of St. Louis, told Bloomberg News last week that he favors a sharp one percentage point increase in the benchmark short-term rate in July. Monday, in a CNBC interview, confirmed his thoughts.
The inflation we are seeing is “very bad for low- and middle-income households, real wages are falling, people are unhappy, consumer confidence is falling, this is not the case.” is a good situation,” he told the network. “We have to reassure people that we will defend our inflation target and we will bring inflation back to two percent.”
Over time, higher interest rates will increase the cost of a wide range of loans, from mortgages and credit cards to auto and business loans. That could bring down spending and inflation, but for the Fed, its decision to steadily tighten credit could also trigger another recession.
Federal Reserve Chairman Jerome Powell signaled two weeks ago that the central bank is likely to raise its benchmark short-term interest rate several times this year.
The The Department of Labor said on Thursday that consumer prices rose 7.5% last month from a year earlier, the strongest year-on-year increase since February 1982.
When measured from December to January, inflation was 0.6%, equal to the previous month and higher than economists expected. Prices rose 0.7% from October to November and 0.9% from September to October.
Labor and supply shortages, massive federal aid, ultra-low interest rates and strong consumer spending have combined to send inflation soaring over the past year. And there is little sign that it will slow down significantly any time soon.
Salary is growing at the fastest rate in at least 20 years, this can put pressure on companies to raise prices to offset higher labor costs. Ports and warehouses are overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation’s busiest ports, falling ill last month. As a result, many products and parts are still in short supply.
The latest inflation data has suggested to some economists that the Fed may raise its benchmark interest rate in March by 1.5 percentage points, rather than the usual quarterly increase.
Bullard told the network he still sees the US economy growing between 3.5 and 4% in 2022.
https://fox2now.com/news/st-louis-federal-reserve-president-this-is-a-lot-of-inflation-calls-for-rate-hike/ ‘this is a lot of inflation’, calls for rate hikes