Re-accelerating the US economy may lead to higher interest rates: B...

Bloomberg – Former St. Louis Fed President James Bullard indicated that the increase in economic activity expected this summer may affect the Federal Reserve’s timeline for ending the series of interest rate hikes.

In an interview with Bloomberg Television ahead of the Kansas City Fed’s annual economic policy symposium in Jackson Hole, Wyoming, Bullard highlighted the possibility that this rise could put upward pressure on inflation. He pointed out that such a scenario could change the Federal Reserve’s intentions to adjust its monetary policy.

Bullard, a prominent figure during his time at the Fed, has called for significantly higher interest rates in response to the recent rise in inflation. However, last month he resigned from his position and became dean of the Mitchell E. Daniels Jr. School of Business at Purdue University. In his analysis, Bullard also recognized the potential for this economic recovery to counter deflationary trends and thus influence the course of Federal Reserve policy.

Policymakers raised interest rates by a quarter of a percentage point last month, setting the benchmark interest rate target in a range of 5.25% to 5.5%. Before its next meeting, which will be held on September 19 and 20. Fed officials will have to analyze other economic data, such as the monthly employment report and new data on inflation.

Economic forecasts released by policymakers in June show that average policymakers expect to raise interest rates at least once more this year. But investors expect the Fed to keep interest rates steady through the end of the year, based on futures prices.

The former head of the St. Louis Federal Reserve said earlier this week that recession fears are overblown and that he believes stronger economic growth may require higher interest rates to continue fighting inflation.