Fed Official Suggests Substantial Rate Hikes May Be Needed

The Federal Reserve may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control, James Bullard, president of the Federal Reserve Bank of St. Louis, said Thursday (Nov. 17) according to an Associated Press report.

Bullard’s comments raised the prospect that the Fed’s rate hikes will make borrowing by consumers and businesses even costlier and further heighten the risk of recession. Wall Street traders registered their concern by sending stock market into the red Thursday. The S&P 500 ended the day down 12.23 points, or 0.3%, at 3,946.56.

Bullard’s remarks followed speeches by other Fed officials in recent days that suggested they see only limited progress, at most, in their use of steadily higher rates to fight inflation. Bullard’s views have added significance because he is a voting member of the Fed’s rate-setting committee this year.

The Fed’s key short-term interest rate “has not yet reached a level that could be justified as sufficiently restrictive,” Bullard said. “To attain a sufficiently restrictive level, the policy rate will need to be increased further.”

Read the full Associated Press report.

Source: https://rvbusiness.com/fed-official-suggests-substantial-rate-hikes-may-be-needed/