Fed's Bullard calls for big rise in interest rates to fight inflation
A late update. Federal Reserve Bank of St. Louis President James Bullard has rattled Wall Street by declaring he supports raising interest rates by a full percentage point by the start of July.
Bullard told Bloomberg TV that today’s jump in US inflation to a 40-year high of 7.5% means the Fed needs to move faster to raise interest rates from their current record low.
“I’d like to see 100 basis points in the bag by July 1.
I was already more hawkish but I have pulled up dramatically what I think the committee should do.”
The report “shows continued inflationary pressure in the U.S.” and “is concerning for me and for the Fed,” Bullard said.
“You have got the highest inflation in 40 years and I think we are going to have to be far more nimble and far more reactive to data.”
Following Bullard’s comments, the markets are now pricing in a 50-basis point hike at the March meeting.
Bullard’s comments clearly crushed the market at midday. The Fed won’t meet again until Mar 15-16, so will get one more jobs report and one more inflation report. The market has now factored in a +50bp rate hike in Mar, paving the way for a +50bp move if the FOMC wants one. $tsla pic.twitter.com/amIVdJJPQG
— Gary Black (@garyblack00) February 10, 2022
Stocks have been knocked in New York, where the Dow Jones industrial average is now down 476 points or 1.3% at 35,292.
Fed St Louis President James Bullard is unnerving the markets by saying the Fed should raise rates by 100bp by July 1, including a 50bp hike in March. On the dove-to-hawk spectrum, Bullard is the most hawkish member of the FOMC. 10yrTY 2.04% (+10.4 bp). pic.twitter.com/2DjoQsGMlj
— Gary Black (@garyblack00) February 10, 2022
Dow Jones drops over 500 points, a selloff set to snap its 3-day winning streak in the finally trading hour following Jan CPI inflation data & after St. Louis Fed President James Bullard said he’s open to a 50-basis point rate hike in March & a full percentage point hike by July pic.twitter.com/O1MKGu1wlt
— Mona Salama (@MonaSalama_) February 10, 2022
10-year US Treasury yields above 2% for the first time since 2019.https://t.co/xKp8I6cqw0 pic.twitter.com/Mt0oBn1Qbs
— Tracy Alloway (@tracyalloway) February 10, 2022
Updated
Closing post
Time to wrap up, after a day dominated by cost pressures, rising prices, and a red hot US inflation print.
Here’s today’s main stories:
Goodnight. GW
