The president of the Federal Reserve Bank of St. Louis announced in a Thursday interview with Bloomberg that he supported increasing interest rates by a full percentage point by July.
“I’d like to see 100 basis points in the bag by July 1,” James Bullard said, according to Bloomberg. “I was already more hawkish but I have pulled up dramatically what I think the committee should do.” (RELATED: Federal Reserve Sticks To Rate Hike Schedule, Signals End To Asset Purchase Stimulus)
There are three Fed meetings set to occur between now and July 1, with Bullard considering a half-point hike in the interest rate at a single meeting, according to Reuters. The hike would be the largest of any made in recent rate-hiking cycles, the outlet reported.
Bullard’s statements follow the Consumer Price Index’s (CPI) 7.5% increase, making it the largest 12-month increase in the CPI since 1982, as previously reported. The skyrocketing inflation has presented a challenge to the Fed as they are forced to find a way to combat the high prices without hindering the growth of the economy.
CME Group traded contracts are now 100% pricing in the proposed March half-point hike, according to Reuters. This marks an increase from the 25% chance of a hike on Wednesday, the outlet reported.
OUCH! Markets now pricing 100% probability of 50bp hike in March after Federal Reserve Bank of St. Louis President James Bullard said he supported raising rates by a full percentage point by July. Markets now see Fed Funds Target Rate at 1.77% by year-end. pic.twitter.com/qo0JWbR6ky
— Holger Zschaepitz (@Schuldensuehner) February 10, 2022
“I do not think it is shock and awe,” Bullard said in reference to his proposed massive interest rate hike, according to Bloomberg. “I think it is a sensible response to a surprise inflationary shock that we got during 2021 that we did not expect.”