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St. Louis Federal Reserve President James Bullard on Thursday said he backed more monetary policy tightening to keep inflation coming down this year.
“Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets,” Bullard said, in a speech to a business group in Jackson, Tenn.
Bullard said he supported the fast pace of interest rate hikes over the last year.
“Front-loaded Fed policy has helped keep market-based measures of inflation expectations relatively low,” he said.
Bullard is not a voting member of the Fed’s interest rate committee this year.
In his talk, Bullard was upbeat about the U.S. economy.
“Perhaps the best interpretation is that real GDP growth is slowing to be in the neighborhood of the potential growth rate of about 2% on a year-on-year basis after stellar growth in 2021,” he said.
He said inflation “remains too high, but has declined.” The labor market performance remains unprecedentedly strong, he said.
“A natural forecast is that the pace of quarterly real GDP will now moderate and unemployment will rise to return to its longer-run natural level,” he said.
U.S. stocks
DJIA,
SPX,
were lower on Thursday as markets reacted to a sense the Fed was not close to ending rate hikes. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.83%.
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