Former St. Louis Federal Reserve Bank President, James Bullard, on Friday, raised concerns about underappreciated inflation risks and hinted at a potential interest rate hike up to 6.5% if inflation spikes again. The warning was issued during a Euro50 seminar at the IMF and World Bank annual meetings in Marrakech.
Bullard emphasized the risk of disinflation pausing and core PCE inflation increasing, triggering worry among policymakers regarding the effectiveness of their strategies. His comments come in the wake of the recent Fed’s September policy meeting where rates remained within a 5.25%-5.5% target range. However, officials indicated their willingness to take additional measures to reach the 2% inflation target.
In recent developments, data revealed a 0.3% increase in the core consumer price index, excluding food and energy costs, pushed higher than expected by energy costs. This surge aligns with an annual inflation rate that surpasses the Fed’s 2% target.
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