Inflation is coming down, but not as fast as Wall Street expects.
James Bullard, president of the ST Fed. Louis.
The US central bank should continue to raise interest rates due to recent inflation data reported that it remains persistent, while the economy seems inclined to continue growing, albeit slowly, the Federal Reserve chairman said. (Fed) of St. Louis, James Bullard.
In an interview with Reuters, Bullard responded to views that the United States is headed for a banking crisis, a recession, or both in the near future: “Wall Street is very committed to the idea that there is going to be a recession in six years. months or so, but that’s not really the way an expansion like this would read.”
Investors may see rate cuts in the near future, part of a recession-based worldview, but “the job market looks very, very strong. And the conventional wisdom is that if you have a strong labor market that fuels strong consumption and that’s a big part of the economy, it doesn’t seem like the time to be predicting that you’re going to have a recession in the second half of 2023,” he said.
Despite the current 3.5% unemployment rate, Fed staff at the March 21-22 policy meeting anticipated a “mild recession” this year, while Bullard’s colleagues have outlined an economic outlook that indicates zero growth or contraction for much of the rest of the year, after a relatively strong first quarter.
But if the failure of two US banks last month were to trigger a crisis, Bullard said, it would likely be reflected in data such as the St. Louis Fed’s financial stress index.
“If there really were to be a major financial crisis, the index would go up to four or five points. Now it is at zero. So it doesn’t appear, at this point, that much is happening,” Bullard said.
one more hike
For his part, Raphael Bostic, president of the Atlanta Fed, pointed out the high probability that the central bank will make another rate hike to continue reducing inflation.
“One more move would be enough for us to take a step back,” he said in an interview with CNBC.
