St. Louis Fed's Bullard says the central bank should raise rates above 3% this year

cnbc.com:

St. Louis Fed President James Bullard said Friday he thinks the central bank should raise interest rates the equivalent of 12 times this year to convince the public it is serious about fighting inflation.

As the lone dissenter at this week's Fed meeting, Bullard said in a statement that he would like to see the central bank's benchmark interest rate boosted above 3% from the near-0% level where it had stood.

Following its two-day meeting, the Federal Open Market Committee on Wednesday said it would raise overnight rates for banks 0.25 percentage point. Accompanying economic projections indicated a path this year that would see the equivalent of seven rate hikes, or 1.75 percentage points.

The move was the first time the Fed has raised the rate since December 2018 and came in response to a stunning rise in inflation that has seen prices increase at their fastest pace in 30 years.

Bullard was the only FOMC member to vote against the move, stating that he would have preferred a rate hike of 0.5 percentage point, or 50 basis points.

In his statement Friday, he said inflation is hurting people the Fed is trying to help the most, namely those at the lower rungs of the economic ladder.

«The burden of excessive inflation is particularly heavy for people with modest incomes and wealth and for those with limited ability to adjust to a rising cost of living,» he said. «The combination of strong real economic performance and unexpectedly high inflation means that the Committee's policy rate is currently far too low to prudently manage the U.S. macroeconomic situation.»

Fed officials overall were divided on how to proceed with rates this year.

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