The US Fed may raise interest rates as soon as March, Bullard said Financial Market News

James Bullard, chairman of the St. Louis Federal Reserve Bank, also said the U.S. Federal Reserve could reduce its balance sheet next time.

Federal Reserve policy makers may begin raising interest rates and lowering the central bank’s balance sheet as soon as possible in March in response to rising inflation, according to James Bullard St. According to the chairman of the Federal Reserve Bank of Louis.

“The FOMC could begin raising its policy rate at a March meeting to better control inflation,” Bullard said, referring to the Federal Open Market Commission, CFA Society St. Louis on Thursday. “Subsequent rate hikes during 2022 could move forward or backward depending on the evolution of inflation.”

Bullard, who has recently been among the most hawkish policymakers, approved the pivot of the policy committee at a meeting last month to address rising prices. Fed officials believed that a stronger economy and higher inflation could guarantee rate hikes “sooner or later” than expected, according to the minutes of the December 14-15 policy meeting released on Wednesday.

In December, the FOMC announced that the Fed’s bond-buying program would end at a faster pace than indicated at the previous meeting in early November, citing rising inflation risks, at a rate that buys in March. The meeting also discussed reducing the balance sheet by not investing in maturity values, even if no decision was made on time.

“Asset purchases will be completed in the coming months, but the FOMC may also choose to allow the discharge of liabilities to reduce the monetary adjustment at the right pace,” Bullard said, describing the movement of the balance sheet. possible next steps ”for politics.

Bullard’s comments were more sincere than those of San Francisco Fed Chairman Mary Daly, who said in a special statement that he was in favor of speeding up tapering, but did not comment on a subsequent reduction in the balance sheet. “That’s a very different conversation than reducing our balance sheet; that would come when we started normalizing the rate of Fed funds, ”he said.

Bullard, who is voting on monetary policy this year, said the commission was responding to an “inflation shock” with the biggest price hike in several decades, and a far greater impact than policymakers expected a year ago.

“Because the real economy is strong, but inflation is above target, U.S. monetary policy has shifted directly to address inflationary pressures,” Bullard said.

Bullard gave a good view of the U.S. economic outlook, saying growth is looking “above trend,” as the economy has responded to fiscal and monetary support. He suggested that he did not see too much danger in the Omikron variant, saying that the number of confirmed cases in South Africa was rising and falling and that the US could follow suit.

St. The Fed official Louis has at times been a supporter of the Fed, and was the first person in charge to speed up and end the reduction in bond purchases by March, in order to raise interest rates before giving officials flexibility. planned.

–With the help of Olivia Rockeman.