Fed’s Bullard says rate hikes have had ‘only limited effects’ on inflation so far. Says funds rate upper bound could be closer to 7%. : stocks

St. Louis Federal Reserve President James Bullard said Thursday the central bank still has a lot of work to do before it brings inflation under control. A voting member on the rate-setting Federal Open Market Committee, Bullard delivered remarks centered on a rules-based approach to policymaking. Using standards set by Stanford economics professor John Taylor, Bullard insisted that the moves the Fed has made so far are insufficient. Even using assumptions he characterized as “generous” regarding the progress the Fed has made so far in its inflation fight, he noted in a series of slides that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.” “To attain a sufficiently restrictive level, the policy rate will need to be increased further,” he added in the presentation.

There’s little if any dissent on the Fed over whether rates need to continue to rise. Most members have suggested a few more increases over the next several months that will take the central bank’s benchmark overnight borrowing rate to around 5% from its current target range of 3.75%-4%. However, Bullard’s presentation argued that 5% could serve as the low range for the where the funds rate needs to be, and that upper bound could be closer to 7%. That is well out of sync with current market pricing, which also sees the fed funds rate topping out around 5%.

Source: https://www.cnbc.com/2022/11/17/feds-bullard-says-rate-hikes-have-had-only-limited-effects-on-inflation-so-far.html