(Reuters) – The U.S. Federal Reserve must fearlessly raise interest rates to contain inflation and prevent inflation expectations from anchoring, St. Louis Fed Chairman James Bullard said on Friday.
“We must act in a direct and offensive way to allow a reversal of the inflation trend and to regain control of it (…) otherwise we could experience a decade of high and fluctuating inflation,” he said. during a debate on central banks and inflation organized by UBS in Zurich, Switzerland.
“So act fast now, get inflation back under control quickly and bring inflation back to the 2% path,” he added.
The Fed last week raised its main policy rate by three-quarters of a point, its biggest hike since 1994, to 1.50%-1.75%, and its forecasts suggest it could reach 3.4 % at the end of the year.
James Bullard repeated on Friday that he would like to see the “fed funds” rate rise to 3.5% by the end of 2022, explaining that the central bank could consider reducing the cost of credit once inflation subsides.
He also played down the risk of a recession in the United States, explaining that the rise in rates would undoubtedly bring growth back towards its long-term trend but not below it.
“We are in the early stage of an expansionary phase in the United States… Unless we are hit by a shock, it would be unusual to fall back into recession at this stage,” he said. said.
(Report Lindsay Dunsmuir, French version Marc Angrand)
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