St. Louis Fed Chair Calls For Half-Point Rate Hike

St. Louis Federal Reserve President James Bullard said Thursday that he advocated for a larger interest rate increase at the latest Fed meeting and that a more aggressive move could be on the horizon.

At the Federal Reserve’s meeting on January 31 and February 1, he pushed for a half-point rate hike, and he hasn’t ruled out doing the same at the March meeting.

According to Reuters, Bullard said as much during a speech he gave in Tennessee: “I was an advocate for a 50-basis-point hike and I argued that we should get to the level of rates the committee viewed as sufficiently restrictive as soon as we could.”

On Thursday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said she preferred a larger hike than the 0.25% proposed by the Federal Open Market Committee. Mester and Bullard abstained from voting on the FOMC this year.

Despite recent strong inflation readings, Bullard said he believes the overall economic trend is headed toward disinflation.

These comments are made in spite of the fact that data for both consumer and producer prices showed larger-than-anticipated increases in January. Despite steady economic growth and a strong labor market, Bullard said higher interest rates will keep inflation in check.