02/15/2022
Fed’s Bullard Concerned with Credibility
With runaway inflation posing an increasing risk to the post-pandemic economic rebound, St. Louis Federal Reserve President James Bullard stepped up the hawkish rhetoric during an interview on CNBC Monday morning. According to Bullard, “I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation,”. Bullard stated in the interview that the Federal Reserve should hike rates by 100 basis points by July 1st, believing that the Fed’s “credibility is on the line”.
Markets
With rate markets focusing on inflation and the fed, Fed futures currently show a nearly 60% chance of a 50bps hike at next month’s meeting, twice the traditional move. Treasury yields are up as well, with the yield on the benchmark 10 year note now above 2%, at 2.04%. Mortgage rates are on the rise as well, with average 30-year rates now above 4%.
