Former Federal Reserve Bank of St. Louis President James Bullard said policymakers should continue to pencil in one additional interest-rate increase this year when they update their projections later this month.
(Bloomberg) — Former Federal Reserve Bank of St. Louis President James Bullard said policymakers should continue to pencil in one additional interest-rate increase this year when they update their projections later this month.
“It’s probably wise from a risk-management perspective, and probably necessary based on the data that we’ve gotten, that they keep that extra rate hike in there,” Bullard, now the dean of Purdue University’s business school, said Wednesday during a National Association for Business Economics webinar.
The US central bank, led by Chair Jerome Powell, is trying to judge whether its benchmark interest rate, which it raised to a range of 5.25% to 5.5% in July, is restrictive enough to slow demand and return inflation to its 2% target. Excluding food and energy, consumer prices rose 4.2% in the year through July.
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Fed officials next gather to decide policy on Sept. 19-20. Futures markets are pricing in almost no chance of a rate hike, though the the odds of an increase at their next meeting in November are seen as a little less than even.
“I think the chair was right at Jackson Hole to say: Hey, this isn’t over yet, core inflation is not down to 2%, we’ve got to maintain flexibility going forward and it’s possible that inflation would stall out or would even head a little bit higher,” Bullard said.
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