St. Louis Fed President James Bullard reiterated yesterday, “I think we have a good plan for now. This 50 basis point per meeting increase is twice the normal pace that the committee has used in recent years which shows that there’s a lot of unanimity around expeditiously moving to neutral in this high-inflation environment that we’re in.”
Bullard also repeated that he wants to get rates to 3.5% by the end of the year. Then some of the rate hikes could be reversed late next year or in 2024. He pointed to the pre-pandemic rates, with Fed rates at 1.55%, 10-year yield at 1.86% and mortgage rates well below 4%. “This may provide a practical benchmark for where the constellation of rates may settle once inflation comes under control in the U.S.,” he said.
