WASHINGTON (Reuters) – St. Louis Federal Reserve Chairman James Bullard said on Friday inflation was higher than expected and that the Fed would need several meetings to determine how to reduce stimulus measures.
“The pandemic is coming to an end, so it’s only natural to figure out how to reduce emergency measures,” James Bullard said in an interview with CNBC.
The US central bank surprised the markets on Wednesday by announcing that it was now counting on a first interest rate hike in 2023 and that it had started the debate on the upcoming reduction of its bond purchases on the markets.
“We were expecting a good year, a good recovery in activity, but it is a stronger year than we expected, with more inflation than expected, and I think it is natural that we have leaned a little more on the side of the ‘hawks’ to contain inflationary pressures, “explained James Bullard.
New projections by Fed officials on interest rates, the “dot plots”, show that 11 out of 18 are now forecasting at least two rate hikes of a quarter of a percentage point in 2023, even if they undertake to maintain the support measures for the moment to encourage the recovery of the labor market.
James Bullard said he was one of seven Fed officials who see a first rate hike next year.