St. Louis Federal Reserve President James Bullard said that he still believes the U.S. economy can avoid a recession, even with an expectation that the central bank will need to keep increasing interest rates to tame inflation that is running at a 40-year-high pace.
Bullard expected the Fed fund rate to end the year at the range of 3.75%-4% from the current 2.25%-2.5% after four rate hikes this year.
“I think that inflation has come in hotter than what I would have expected during the second quarter,” he said during a speech in New York. “Now that that has happened, I think we’re going to have to go a little bit higher than what I said before.”
In July, the U.S. Federal Reserve raised its policy rate by 75 basis points for the second-straight meeting and reiterated that further rate hikes would be appropriated to bring down inflation.
The U.S. economy has officially entered into a recession after the economy in the second quarter of 2022 contracted 0.9%, that was after a 1.6% decline in the first three months of this year.