The United States has seen prices rise as sharply as it has been in 40 years.
(Photo: Reuters)
Washington The US Federal Reserve Banker James Bullard has spoken out in favor of tightening US interest rate policy. “I now think that we should maybe take four steps in 2022,” said the head of the St. Louis central bank district on Wednesday the “Wall Street Journal”.
In December, the members of the US Federal Reserve signaled that they could raise interest rates three times this year. Bullard himself said two rate hikes were appropriate in November.
With his latest swing, Bullard confirms market expectations that the Fed could raise interest rates more strongly this year than previously communicated in view of the steep rise in inflation. Goldman Sachs economists expect four interest rate hikes. Jamie Dimon, CEO of major bank JP Morgan Chase, believes it could be even more.
Federal Reserve Chairman Jerome Powell announced on Tuesday that he would soon abandon the policy of cheap money. The US is currently suffering from the highest inflation in about 40 years. Goods and services cost 7.0 percent more in December than in the same month of the previous year.
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In its economic report “Beige Book” published on Wednesday evening, the Fed pointed out that supply bottlenecks and a shortage of workers at the end of 2021 would have put significant price pressure on prices. The Fed also stated that the US economy has recently grown at a moderate pace. The outlook for the near future remains largely positive in most Fed districts.
According to Fed Director Lael Brainard, controlling inflation is currently the most important task for the US Federal Reserve. “We are currently experiencing the strongest upswing in growth and the strongest decline in unemployment in the wake of an economic recovery in the past five decades,” said Brainard, according to statements published in advance for the hearing before the Senate Banking Committee. Powell’s Vice-nominee-designate is due to answer questions on Thursday.
Brainard added that inflation is too high and working people in the US are concerned about wages and salaries to make purchases. The Fed’s monetary policy is focused on pushing inflation back to two percent while maintaining the recovery that everyone needs to achieve. That is the Fed’s most important task.
More: Comment – US inflation comes with frightening force