(Bloomberg) -- Federal Reserve Bank of St. Louis President James Bullard said he expects the central bank will need to raise interest rates twice more this year to quell inflation.
“I think we’re going to have to grind higher with the policy rate in order to put enough downward pressure on inflation and to return inflation to target in a timely manner,” he said Monday during a moderated discussion at an event in Fort Lauderdale, Florida.
“I’m thinking two more moves this year – exactly where those would be this year I don’t know – but I’ve often advocated sooner rather than later,” he told an American Gas Association financial forum.
Bullard is a closely-watched hawk who was an early advocate for aggressive rate hikes before the central bank began lifting borrowing costs last year. He does not vote on the policy-setting Federal Open Market Committee in 2023.
Policymakers raised rates aggressively since early last year, bringing their benchmark to a range of 5% to 5.25% from near zero. They’ve slowed down this year, delivering three consecutive quarter-point hikes after raising at a faster clip for much of 2022, and some officials have signaled support for a pause at their June 13-14 meeting.
Fed’s Kashkari Says a June Rate Pause or Hike Is a ‘Close Call’
Officials in March forecast rates peaking at 5.1%, according to their median projection and they reached that level earlier this month. The forecasts will be updated at the June meeting.
Bullard said the March forecast was based on a US economy which was barely growing with inflation falling fast and instead growth had been pretty robust and price pressures were not cooling as quickly as hoped.
That’s why he argued the committee needs to move rates higher and the current environment, with unemployment at the lowest levels since the 1960s, was a good time to act.
“As long as the labor market is so good it’s a great time to fight inflation, get it back to target,” he said. “Get this problem behind us and not replay the 1970s.”
(Updates with more Bullard comment in second paragraph.)
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