Fed President James Bullard Gets Behind Massive Interest Rate Hike, Leaving Markets Scrambling

(Photo by ALASTAIR PIKE/AFP via Getty Images)

Bryan Babb Contributor
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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.

“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.”