Fed needs to move aggressively to control inflation: Official

By Ovunc Kutlu

ANKARA (AA) - The US Federal Reserve needs to move "aggressively" in order to keep record-high inflation under control, an official said Tuesday.

"We need to get to neutral at least so that we are not putting upward pressure on inflation during this period when we have a much higher inflation than we used to in the US economy," St. Louis Fed President James Bullard told Bloomberg TV channel.

Bullard, who is a member of the Federal Open Market Committee (FOMC) with voting rights this year, was the only FOMC official last week who advocated a rate hike of 50 basis points.

The FOMC last Wednesday decided to approve a 25-basis-point rate hike, the Fed's first since late 2018, and signaled six additional interest rate increases in the remainder of 2022.

"I think faster is better," said Bullard when asked about the pace of rate hikes, pointing to the central bank's monetary tightening cycle in 1994, when the bank moved interest rates by 200 basis points in a single year.

"We came out of the (coronavirus) pandemic and got surprised by inflation. But now what you have to do is to move the policy rate up discreetly, a fair amount, not to be too disruptive, but I think 50-basis-point moves will definitely be in the mix," he said.

Bullard's comments came a day after Fed Chair Jerome Powell said the central bank is committed to restoring price stability, even by raising interest rates more "aggressively."

"We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," he said during a speech at the National Association for Business Economics’ annual conference in Washington, D.C.