(Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard said U.S. monetary policy needs to be tightened quickly to stop putting upward pressure on inflation which is already too high, reiterating his call for interest rates to rise above 3% this year.
“The Fed needs to move aggressively to keep inflation under control,” Bullard said in an interview Tuesday on Bloomberg Television with Michael McKee. “We need to get to neutral at least so we’re not putting upward pressure on inflation during this period when we have much higher inflation than we’re used to in the U.S.”
The neutral rate is the level that neither spurs nor restrains inflation.
The Federal Open Market Committee last week voted 8-1 to raise rates by a quarter percentage point for the first time since 2018, with Bullard dissenting in favor of a half-point hike and commencing the roll-off of the central bank’s nearly $9 trillion balance sheet. Chair Jerome Powell said Monday that he and his colleagues were prepared to raise rates by a half point at their May 3-4 meeting if needed as they try to contain the hottest inflation in 40 years.
Asked how quickly the Fed should move, Bullard said “faster is better,” adding that “the 1994 tightening cycle or removal of accommodation cycle is probably the best analogy here.”
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