St. Louis Fed President calls for additional rate hikes

St. Louis Federal Reserve President James Bullard reiterated his call for additional rate hikes that would restrain economic growth. St. Louis Federal Reserve President James Bullard reiterated his call for additional rate hikes that would restrain economic growth, which he said sets the stage for a return to more ordinary monetary policy in 2023. “The policy rate has not yet reached a level that would be considered sufficiently restrictive,” Bullard said in an article published online Tuesday, adding that forecasts suggest a rate of at least 4.9% will be needed. “The policy rate will eventually reach a level that the FOMC determines is sufficient to exert meaningful downward pressure on inflation,” Bullard said, referring to the Federal Open Market Committee. “From there, the FOMC can adjust the policy rate up or down based on incoming data without having to raise it from near zero to a level that is deemed appropriate for the inflation environment.” Bullard said Monday that financial markets are underestimating the likelihood that policy makers will be more aggressive in raising interest rates next year to rein in inflation. Fed officials signaled they plan to raise the benchmark interest rate by 50 basis points at their final meeting of the year on Dec. 13-14, following four consecutive 75 basis point hikes that have brought the benchmark interest rate to a target range of 3.75% to 4%.