St. Louis Central Bank President James Bullard said on Thursday that inflation may turn out to be more serious problem without action from central bank on interest rates.
Bullard cautioned, “We are at more risk now than we have been in a generation that this could get out of control. One scenario would be, a new surprise that hits us that we can’t anticipate right now, but we would have even more inflation. That’s the kind of situation that we want to make sure it doesn’t occur.”
Bullard is pushing for aggressive Federal Reserve action by suggesting for a full percentage point increase in interest rate by July this year to curb rising prices that are increasing at the fastest speed in 40 years.
Bullard repeated his assertion on Thursday by saying, “the Fed should “front-load” rate hikes as way to get ahead of inflation running at a 7.5% clip over the past year.”
Bullard said, “Overall, I would say there has been too much emphasis and too much mindshare devoted to the idea that inflation will dissipate at some point in the future. We are at risk that inflation won’t dissipate, and 2022 will be the second year in a row of quite high inflation. So that’s why given this situation, the Fed should move faster and more aggressively than we would have in other circumstances.”